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Goldman Raises Estimate Of Growth Hit From Tariffs, Says Trump Could Theoretically Leverage IEEPA
Donald Trump's latest and, he would probably say "greatest", tariff escalations have forced analysts to go ahead and pencil in an even larger hit to US GDP growth and a bigger fillip to inflation.
"Following Friday’s escalation, we have increased our estimate of the trade war hit to the level of US GDP by 0.1pp to 0.7%", Goldman writes, in a new note.
The bank's baseline policy scenario now sees the trade war drag on the annualized pace of GDP growth reaching almost 0.5% in second half of th
Would not even a limited application of the authorization presented above result in the wiping out many businesses and therefore create a measurable drag on the economy?
If Trump forces manufacturers to leave China, the Chinese could just insist on taking over the factories, equipment and all. The workers are there. The equipment is there. What’s to stop the Chinese from starting the machines, putting the workers back to work and making the goods themselves. They’ll still be able to make the goods cheaper than if the companies moved back to the US. So they will undercut the companies that try to restart in the US by selling the goods outside the US cheaper. A lot of companies won’t be able to compete and will go under. The goods sold to US citizens by the companies which restarted in the US will be more expensive and probably protected by tariffs so inflation will jump up. It’s a lose lose situation for a lot of companies. Frankly, it would be a disaster.