Washington, August 19 : US President Donald Trump’s economic policy has a cascading effect: the trade war will significantly damage the supply chains, brings uncertainty in generating business, thereafter reducing investments and thus forcing the Federal Reserve to cut the interest rate but Trump has tried to reassure markets about the risk of the US falling into a recession by saying the economy was doing “tremendously well”.
The US -China trade war has a wider implications for the global economy and stability.
“I don’t see a recession. The world is in recession right now,” Trump told mediapersons before boarding the Air Force One from New Jersey on Sunday.
“I don’t think we’re having a recession. We’re doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they’re loaded up with money”.
He also mentioned last week’s healthy profits from Walmart, the US retailer often described as the world’s biggest, and pointed to a strong performance from US consumers.
“Most economists actually say we are not going to have a recession. Most of them are saying we will not have a recession, but the rest of the world is not doing well like we are doing.”
The President’s remarks came after White House economic adviser Larry Kudlow had told Fox News earlier on Sunday that the US economy remained “in pretty good shape”.
“There is no recession in sight,” Kudlow said.
“Consumers are working. Their wages are rising. They are spending and they are saving.”
On August 14, US stock markets fell by about 3 per cent when the yield curve inverted, although they had recovered lost ground by the end of the week.
Last month, the US Federal Reserve cut interest rates for the first time since 2008, and more cuts were expected.
The US economy also slowed last quarter, growing by 0.5 per cent – its weakest performance in more than two years.
The president in August had threatened to impose a 10% tariff on $300 billion on Chinese tariffs, slated to go into effect September 1. The items taken off the tariff list for now include cell phones, laptops, video game consoles, computer monitors, holiday lights and some types of toys, shoes and clothing.
Tariffs should be targeted at specific goods that are being dumped in our country that is, sold far below cost to capture market share.