Recession due to the trade war. What awaits America

Recession due to the trade war. What awaits America

Photo: Getty
Donald Trump and Xi Jinping

The agreement between Beijing and Washington, experts do not expect until the presidential election and lower economic forecasts.

A settlement in the trade war between the US and China is unlikely until the next presidential election, and the impact of the conflict on the growth rate of the US economy is intensifying, which could lead to a recession.

However, US leader Donald Trump is confident that tough policies against China will benefit the United States. But his steps have already caused shocks in the financial markets and reinforced concerns about the global recession.

Trump's trade war affects the whole world.

Analysts from Goldman Sachs Group Inc. They expressed concerns that a trade war between the US and China would lead to a recession in the US economy, as the parties are unlikely to make a deal before the next US presidential election in 2020.

“We expect the entry into force of tariffs on the remaining imported goods from China to $300 billion,” Reuters quoted a bank message sent to customers on August 12.

Goldman Sachs said it lowered its forecast for US economic growth for the fourth quarter by 20 basis points, to 1.8 percent.

“In general, we have increased our assessment of the impact of the trade war on the rate of economic growth,” the bank said.

US companies and consumers paid $6 billion in fees in June, up 74 percent from the same period last year. This was reported by a coalition of American trade organizations, warning that new duties would lead to job losses and reduced demand.

On August 1, Trump, despite the agreement with Chinese leader Xi Jinping, which they reached the G20 summit, announced his intention to impose ten percent duties on the remaining unimpaired volume of Chinese imports in the amount of about 325 billion dollars.

The United States later declared China a currency manipulator due to the fact that Beijing did not support the yuan falling to the eleven-year record. Chinese authorities deny the allegations.

The American president also called for weakening the dollar to make it more competitive in trade relations with other states.

Experts worry that the rivalry between China and the United States could result in a currency war that would hurt the whole world.

China's allegations of currency manipulation led to turmoil in financial markets. But Trump that this was expected, and he is still confident in the strength of the American economy.

“In the end, it (the economy) Will rise much higher than ever, because China pulled us down like an anchor. China killed us with unfair trade agreements,” he said on August 8.

According to Voice of America, White House employees hope that the Chinese delegation will arrive in Washington in September for negotiations and that new duties can still be avoided.

The International Monetary Fund is also calling for an agreement. On August 10, the organization said that without an agreement on the global trading system, it would be undermined.

“The tension between China and the United States should be resolved soon. China plays an important role and will only benefit from the further opening of its economy and other reforms aimed at increasing competition,” the IMF said.

In addition to the recession, the United States is also predicted to default. In early July, the Bipartisan Policy Center, BPC announced that the U.S. federal government would not be able to fully and timely pay all of its bills in the first half of September 2019.

Market analysts warned that a default on US bonds could scare off investors, lead to a “collapse” of debt markets, as well as an increase in the cost of loans for the government and individuals.
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