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Modest Tariff Impacts To Worsen If Trade War Continues

By Jeffrey Schulze
Forbes Magazine
June 13, 2019
Category: Business & Politics
Region: Canada, United States

With trade wars front and center – and the S&P 500 falling 5% off its recent high – many investors are questioning what the impacts will be on the global economy and financial markets. As trade tensions increase, global economic growth expectations often fall. Aggregate demand slows, and in turn, investors anticipate less demand for raw materials. This led prices of some commodities to recently tumble: copper, lumber, chemicals, steel and even crude oil. Yet the economic impacts of higher tariffs have been fairly muted, a sub-1% drag to GDP. In this fluid situation, our view is the most recently announced tariffs do not represent the endgame. …When consumers feel the pinch, their confidence and spending usually suffer. This could drive GDP back down to its 2-2.5% trend.

 

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