Off The Wire
Trade woes to shave 0.3% from U.S. GDP by 2020: congressional budget experts
WASHINGTON (Reuters) - Higher trade barriers, including President Donald Trump’s tariffs, are taking a toll on the U.S. economy as rising domestic prices reduce consumers’ purchasing power and increase the cost of business investment, congressional budget experts said on Wednesday.
The nonpartisan Congressional Budget Office said changes in U.S. and foreign trade policies since January 2018 will reduce inflation-adjusted U.S. gross domestic product by 0.3 percent from what it would be otherwise in 2020.
Tariffs are also expected to reduce real income for the average U.S. household by 0.4 percent, the CBO said in an updated economic forecast.
“Tariffs also affect business investment by increasing business’ uncertainty about future barriers to trade and thus their perceptions of risk associated with investment in the United States and abroad,” CBO Director Phillip Swagel said in a statement.
The budget office left its economic growth forecast for 2019 unchanged, at 2.3 percent. Though down from last year’s 2.5 percent growth rate, the CBO projected that higher discretionary spending by the federal government would offset downward pressure from trade issues, including reduced exports.
Reporting by David Morgan; Editing by Andy Sullivan, Chizu Nomiyama and Jonathan Oatis