Key Facts About Tariffs, Interest Rates, And Economic Strength
Published Friday, December 7, 2018 at: 7:00 AM EST
Tariffs, interest rates, and the economy's strength are triggering fear and market volatility. Here are the facts.
Fears of a trade war with China are all over financial cable TV news and even The Wall Street Journal headlines are sounding an alarm, implying it could become a major problem. But the facts indicate such fear is overdone.
In an October 8th column on this topic, Bob Davis in the WSJ quoted from a study by JP Morgan concluding that tariffs would reduce U.S. output growth by just one-tenth of 1% in 2018 and three-tenths of 1% in 2019. Assuming the worst fears about a trade war with China would be realized, resulting in a $125 billion tariff on $500 billion of imports on Chinese goods, the impact on the $20 trillion U.S. gross domestic product was miniscule.
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