Somebody’s keeping score in this trade war, and it’s the Congressional Budget Office (CBO), which now says that this tit-for-tat with China will end up costing the average American household $580 by next year--and that doesn’t include new tariffs that are set to go into effect in the third quarter of this year. If $580 doesn’t sound like a deal-breaker for the average American, think again: That figure represents $60 billion in lost economic activity.
It’s also not a small figure when you consider that nearly 40 percent of American adults would not be able to cover a $400 emergency with cash, savings or a credit card that could be quickly paid off.
“Higher trade barriers — in particular, increases in tariffs — implemented by the United States and other countries since January 2018 are expected to make U.S. GDP about 0.3 percent smaller than it would have been otherwise by 2020,” CBO Director Phillip Swagel said on Wednesday, as reported by The Hill.
The newly released CBO study comes amid repeated claims by Trump that the U.S. is not bearing the cost burden of the administration’s tariffs on China.
That $580 loss to the average American wallet is also set to get worse. The next phase of tariffs is a planned 10-percent tariffs on billions more in Chinese goods by the fourth quarter of this year, plus whatever tariff-related retaliation Beijing has in store for us.
The CBO also had some other bad news in its Wednesday outlook report, projecting that budget deficits will average $1.2 trillion a year between 2020 and 2029 “boosting debt held by the public to 95 percent of GDP in that year--its highest level since just after World War II.”
The bigger picture, according to the CBO, is that Trump’s tariffs are projected to shrink GDP by 2020, with further tariffs threatening to stifle economic growth.
“Economic output is projected to grow by 2.3 percent in 2019, supporting strong labor market conditions that feature low unemployment and rising wages. After 2019, in CBO’s projections, economic growth averages 1.8 percent per year, which is less than the historical average.”
This year, the budget deficit is expected to hit $960 billion, which is $63 billion higher than CBO’s last report in May. This massive increase is attributed to a new budget deal signed into law by Trump on August 2.
“The nation’s fiscal outlook is challenging,” CBO director Swagel said in the report. “Federal debt, which is already high by historical standards, is on an unsustainable course.”
By Fred Dunkley for Safehaven.com
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