Beaulieu: What If They Return Fire?

Are the markets’ fears of a trade war exaggerated or are their concerns justified? Popular economist Alan Beaulieu, president of ITR Economics, offers the following macroeconomic perspective:

Section 232 tariffs on steel and aluminum coming into the U.S. from Canada, Mexico and the EU are a hot topic, and with good reason. The extension of the tariffs to these regions is an open invitation for retaliation from our key trading partners and allies. Retaliatory tariffs on steel and aluminum exports from the U.S. to these nations will most likely put downward pressure on profits and job growth in key segments of the economy, and thus slow economic growth in various industries. The impact of retaliatory tariffs is consistent with ITR Economics’ forecast of slower growth in U.S. GDP, and a mild decline in U.S. Industrial production, in 2019. (It does not advance the timing for our projected 2030 Great Depression.)