Trump tariffs lead to economic consequences

It appears President Donald Trump’s idea of “making America great again” includes possibly provoking another trade war and inching the nation’s economy to the brink of a recession.

President Trump’s threat to punish Mexico with tariffs until it restrains the flow of migrants rattled financial markets on Friday, and the Mexican government, American businesses and Republican lawmakers pressed Mr. Trump to back down.

The president has made frequent use of tariffs to try to force trade concessions from other governments, including Mexico, Canada, China and Europe. But he escalated his aggressive approach by threatening to hit a United States ally and its largest trading partner with tariffs over concerns about immigration.


Stock prices slid on Friday, continuing a monthlong retreat, with the S&P 500 down nearly 6 percent this month and the bond market flashing worrying signs of a global recession. Shares in General Motors fell by more than 4 percent, while shares of Ford were down 2 percent.

Trump’s tariffs – and the resulting trade wars with countries like China – have led economists to warn an economic recession could be on the horizon for this year.

Economists have warned the recent slowdown experienced by the U.S. economy carries with it “the unmistakable whiff of a recession.” So far, the U.S. economy has outperformed expectations, a trend it maintained during the first three months of 2019, when it grew at a better-than-expected 3.2 percent.

However, economists expect growth to ease off to below 2 percent on an annual basis in the second three months of the year. Last week, a survey from IHS Markit showed the index of production among U.S. manufacturers had fallen from 52.6 in April to 50.6 in May. While any figure above 50 indicates the sector expanded in the period, the reading was the lowest in nine-and-a-half years.

Earlier this month, government data showed sales at U.S. retailers dropped for the second time in three months, sliding 0.2 percent from the previous month in April. While a drop was expected after retail sales rose 1.7 percent in March, the slowdown in April suggested Americans were being a lot more cautious with their finances than 12 months ago.


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