The trade disputes started by US President Donald Trump will reduce the income of each American household by $ 580 (523 euros) by 2020. The congressional independent budget office (CBO) announced this on Wednesday. The economic output of the United States will be around 0.3 percentage points lower because of trade conflicts. After 2020, however, the negative effect will abate as companies change their supply chains.
So far, Trump has always said that trade disputes would only hurt those countries with tariffs, including China. Experts fear, however, that the trade conflicts could significantly affect the US economy.
According to the CBO, trade disputes hurt the economy in several ways: tariffs increase the price of products, thus reducing the purchasing power of citizens. In addition, companies would postpone or cancel investments because trade disputes created heightened uncertainty. In addition, countries that would be subject to special US tariffs would answer them with their own customs duties. This in turn slows down US exports.
So far, the US economy is growing and unemployment is low, but growth has recently slowed. In August, the government unexpectedly postponed additional punitive tariffs on Chinese imports to December so as not to impact Christmas business. Many analysts saw it as an admission by Trump that the tariffs also hurt the US economy.