Trade and Trump: the US economy in 2017

Trade and Trump: the US economy in 2017
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GRI Debate: Will Donald Trump’s protectionist measures cause a downward turn?

A month into office, Trump has taken a tough stance on trade from “America First” to scrapping TPP. GRI asked two of its top experts: will his protectionist stance help or hurt the US economy?

The case for why the US economy will suffer in 2017

hundred dollar bills
Jeff Moore argues that Trump’s policies present an immediate risk to US and global markets.

“Already suffering from a combination of low wage growth and rising costs, the addition of an effective tax on imports could raise prices by an estimated 20 percent on the American consumer. Even though proponents and economists theorize long-term Dollar appreciation would also occur and offset price disruptions, the added costs must come from somewhere in the short-term, in turn depressing discretionary spending activity and dragging on market sentiment.”

Read the full article here.

The case for why the US is ok – for now

steel factory
Nandini Rao argues that at least in the short term, the US economy might benefit from Trump’s policies.

“As more companies favour reshoring over offshoring, and thereby expand manufacturing in the US, in the short-term, this could lead to higher domestic production and employment … Consequently, an increase in low-wage manufacturing jobs has the potential to stimulate consumption in the US economy, at least in the short-term. This would have positive short-term economic implications as consumption is a significant contributor to US GDP growth. “

Read the full article here.

GRI Debates provide critical insight into the world’s most challenging political risk topics. Through well-balanced opinion based articles, GRI Debates offer a forum for deeper discussion into how major political decisions and security challenges affect markets, investment, and economic growth across the globe.

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