Is Trump’s Trade War Causing a Recession?
Any hope of robust economic growth resulting from unleashing energy abundance, deregulating the private sector economy, or pro-growth tax policy may now be doused by the economic fallout of a pointless trade war.
It started as a murmur—a slight downward revision, nothing alarming. But within five days, the Federal Reserve Bank of Atlanta’s GDPNow forecast for the first quarter of 2025 went from mild optimism (2.3 percent growth) to outright recessionary territory (-1.5 percent). By March 3, the number had plunged to -2.8 percent, the kind of contraction that doesn’t just signal weakness but outright economic distress. Eight months of stock market gains were wiped out in less than four weeks.
Yet there is deafening silence from Washington. The Trump administration remains deeply committed to its protectionist crusade, under the misguided belief that tariffs and trade barriers come at no cost to Americans. But reality is setting in, and the numbers don’t lie. The ongoing trade war, with its uncertainty and economic distortions, is now visibly hammering investment, exports, and consumption—three pillars of growth.Â
A significant downward revision in the real gross domestic product (GDP) forecast in late February was the first real shock. The trade imbalance increased dramatically, cutting almost four percentage points off GDP growth in one stroke, as businesses accelerated imports in anticipation of tariff hikes. This “front-loading” behavior has been observed in previous trade wars—companies rush to stock up on foreign
Article from Reason.com
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