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"White House economic advisers are spreading the word that second-quarter GDP, out Friday, may surpass 4% - the first time growth has hit or exceeded that number since the third quarter of 2014, FOX Business has learned.
Ahead of the data, Trump administration officials are preparing a major victory lap and plan to use the strong data points as proof that the president’s economic policies of lower taxes and deregulation have reversed years of economic malaise that followed the financial crisis and President Barack Obama’s fiscal agenda, according to people close to the White House."
[...] If GDP does surpass 4% on a quarterly basis it will be the first time it has done so since the third quarter of 2014, when it registered 5.2% during Obama’s second term in office. Even so, economic advisers in the Trump administration, such as Larry Kudlow, have blamed Obama’s policies of higher taxes and enhanced regulations for the relatively feeble economic growth during his eight years in office, where GDP never grew above 3% on a yearly basis.
[...] Still, as the White House prepares to tout GDP as evidence of the administration’s economic prowess and progress, some business leaders and economists have expressed doubts that certain fiscal policies, as they relate to trade, may be problematic and soon endanger growth.
Trump has engaged in a trade war with many trading partners, slapping tariffs on foreign goods and materials, and threatening to walk away from the North American Free Trade Agreement [NAFTA], a trade deal the country has with Mexico and Canada.
[...] Many countries have responded with tariffs of their own on U.S. products sold abroad, and there’s growing anecdotal evidence that American manufacturers are being hurt by the tariff war. It’s unclear if the retaliatory tariffs and their negative impact on the sale of U.S. goods abroad will show up in the second-quarter GDP numbers, but most economists believe such policies will ultimately hurt economic growth.
“Without question, tariffs will hit growth in the coming quarters as companies face higher prices and supply bottlenecks, and investment and consumption fall relative to where they would otherwise be,” Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations, tells FOX Business. “The only question is by how much, which depends on how far tariff madness spreads,” he warns.
“I would remind folks that the president's team has already said, ‘There will be no retaliation.’ They've already been wrong,” [CEO of JPMorgan Chase, Jamie] Dimon told CNNMoney. “If I was the president, I'd be a little ticked off at some of my advisers, to tell you the truth.”
foxbusiness.com/economy/us-economic-growth-nears-5-time-to-celebrate
(Score: 3, Insightful) by zocalo on Friday July 27 2018, @12:51PM (4 children)
All this is really doing is raising prices for everyone who buy's the goods that are subject to tarrifs - instead of importing at $x/unit you now have a choice of paying $x+tariffs/unit or buying the presumably more expensive/inferior quality local equivalent (or why import in the first place?) at $y/unit, which results in higher prices or lower standard goods for the consumer, falling demand, and ultimately in a fall in production. So, yes, there are losers, and those losers are going to complain - loudly - and get the media coverage. The *really* interesting part though is the winners - the governments who cream off the extra taxes, and those that are able to actually come out ahead from bailouts/tariff subsidies like Trump's $12b for farmers, or those that can work around the tariffs through shifting production around, playing shell games, or milking the subsidies. That's the list I'd be more interested in, because the people with the most control over it, and thus an opportunity to potentially funnel some money towards cronies, are those that are ultimately setting the subsidies in the first place - e.g. Trump, Barnier, and Jinping. They've all got the opportunity - do you suppose any of them might think they could get away with actually doing it, because if *they* think that they can you bet they're going to do it.
UNIX? They're not even circumcised! Savages!
(Score: 4, Informative) by DeathMonkey on Friday July 27 2018, @04:27PM (1 child)
For every $billion in tariffs Trump has provisionally or actually put on the EU and China, the EU and China have responded in kind, so the net result at the GDP level is ultimately... zero.
That's not how GDP works....
(Score: 2) by zocalo on Friday July 27 2018, @07:34PM
I think the jury is very much still out on the political victory though. Yes, the EU and and China both need trade with the US, but equally the mainstream political attitude towards the Trump in both the EU and China seems to a mix of bemusement and "we've only got to put up with this clown until 2020. 2024 at worst", entirely ignoring the fact they might get "Trump MkII" in 2024. I expect the political fight to be long, and the economic fall out for businesses to be high.
UNIX? They're not even circumcised! Savages!
(Score: 2) by Arik on Friday July 27 2018, @05:43PM
Yeah, no, that's not how it works at all.
Tariffs result in overall lower efficiencies so they'll have a negative effect, but not necessarily a large one in comparison to the entire GDP. And they're negative for both parties btw, which is why responding to tariffs with tariffs makes no sense at all economically.
It makes sense politically, however, and that's what all of this is about. Political maneuvering. If Trump's tariff's are as he seems to intend them a short-lived negotiating tactic that results fairly quickly in a fairer deal going forward, it will have been a success; but if the tariffs and counter-tariffs linger on for years with both parties dug in then it will have been a failure.
If laughter is the best medicine, who are the best doctors?
(Score: 1, Interesting) by Anonymous Coward on Saturday July 28 2018, @03:28PM
This means more stuff or lower income taxes. It isn't bad at all.
Prior to World War I, the USA was funded by tariffs. There was no income tax. Wouldn't that be great again? People who simply must dine on Italian ham will pay the tariffs, and the rest of us go tax-free by buying American.