According to Reuters, the gross domestic product (GDP) of the United States is about 20 trillion US dollars, and the global GDP is about 85 trillion US dollars. Trade uncertainty has a drag on US GDP and global GDP of about 200 billion US dollars and 850 billion US dollars respectively.
But it is worth noting that they were among the first researchers to quantify the tremendous impact of President Trumps approach to trade agreements. Trump said trade agreements put the U.S. economy at a global disadvantage.
In order to achieve better terms of trade, the Trump government raised tariffs on hundreds of billions of dollars of Chinese imports and imposed or threatened to impose tariffs on other trading partners, including Mexico and the European Union.
Trump called on the Federal Reserve to cut interest rates to support the economy and offset the impact of the trade war.
Reported that the Federal Reserve policymakers said they would not allow political factors to influence interest rate policy. But they have always said that these tariffs are not conducive to U.S. economic growth. Federal Reserve Chairman Powell pointed out last month that uncertainties in trade policy were an important reason for the global economic slowdown and the weakness of U.S. manufacturing.
Bloombergs September 6 report quotes Dario Caldara, the lead author of the study, and four other co-authors as summarizing their report on the Federal Reserves website on September 4, referring to the increase in trade conflicts in the first half of 2018, which led to a decline in global gross domestic product (GDP) by about 0.8% in the first half of 2019.
They added: If trade tensions did not escalate again in May and June 2019, the drag on GDP would have begun to ease. However, since May 2019, new uncertainties have brought more ripple effects, which may further lower GDP in the second half of 2019 and 2020.
Bloomberg also pointed out that the study marked an attempt by the Federal Reserve to quantify the cost of re-dividing the global trading landscape between the United States and other countries. At the same time, President Trump attributed financial market volatility and economic risks in his eyes to the Federal Reserve rather than the trade war, and the report was also a response to his efforts to shift his focus.
Picture: The Federal Reserve Building in Washington, D.C. (AFP)