Could a weakening US economy imperil Trump’s trade war against China?

Could a weakening US economy imperil Trump’s trade war against China?

President Donald Trump’s trade war with China is based on two basic and complementary assumptions: the U.S. economy is strong and, perhaps more importantly, stronger than the Chinese economy. Last summer when the war began heating up, both assumptions were certainly true. The American economy was booming , while China’s was slowing . Hence, the U.S. was in a better position to withstand any pain in a tariff war of attrition. But the first of those assumptions, at least, is beginning to falter as signs grow of economic weakness in the U.S. As an economist who conducts research in international trade , I believe that a weaker U.S. economy would likely affect Trump’s ability to engage in a prolonged trade war with China – no matter how much he might want to . Signs of weakness The U.S. economy has been expanding for a decade now, and no economy can continue to grow indefinitely. The May jobs report was the latest indicator that the party may be coming to an end. The report showed that the U.S. economy added only 75,000 jobs that month, a significantly lower number than the 224,000 jobs added in April. Even though the unemployment rate stayed at the extremely low figure of 3.6%, worryingly, there was virtually no wage growth. In addition, another key metric, the so-called ISM Manufacturing Index, fell to its lowest level in Trump’s presidency in May. And while GDP growth has remained fairly robust, there have been other harbingers of […]

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