America’s hardening trade policy stance has spawned a series of protectionist announcements, some of which have been implemented (see Figure 6). November’s mid-term elections may well encourage President Trump to keep playing the protectionist card (see Figure 7).
While discussions with Mexico and the European Union have yielded some results, lowering the risk of a widespread trade war, they sometimes end up being contested. Furthermore, trade tensions with China remain high.
On 17 September, President Trump confirmed he was levying tariffs on an additional $200 billion worth of Chinese imports, effective from 24 September, and he threatened more of the same on another $267 billion (i.e. the remainder of China’s exports to the US), if China retaliates.
IMF estimates made before the last G20 summit indicate that the impact of the tariff increases themselves is unlikely to be very substantial.
However, any concomitant fall in market confidence could lead to a much greater impact.
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