Even though the U.S. economy has fared well over the past few years, there have been shortfalls in both the manufacturing and farming industries — two groups President Trump vowed to protect during his campaign and two groups that turned out to support him on election day. But with Trump’s America First economic and trade policies (which could be described as anti-globalist and protectionist), radical changes could be on the way with regard to trade, which could have a drastic impact on global markets and, subsequently, millions of Americans in those industries and on the outside, looking for a way back in.
With these talking points in mind, here’s a look at how Trump’s new trade agenda could have a direct impact on both you and your wallet.
Unemployment Could Skyrocket
Trump’s talk of imposing tariffs on other countries, including 20% on goods from Mexico and 45% on those from China (on everything from avocados to electronics) could prompt these other countries to respond with tariffs of their own. That has all the makings of a full-on global trade war that could potentially cause a global recession within a two-year time frame. A study by The Peterson Institute estimated up to 4 million jobs could be lost in a trade war, which would cause unemployment to rise by as much as 8.6% — higher than it was after Bush left office in 2008 during the last global recession.
There’s also the chance that we’ll get what’s called an aborted trade war. This means that Trump enacts the tariffs, then pulls them after realizing their significant economic impact. This results in fewer job losses — only around 1 million or so — with unemployment shooting up by about a point. Of course, a loss of that magnitude will still shake up the lives of families and communities, and it could have a ripple effect on the U.S. economy, causing wage stagnation, and eventually, the loss of more jobs.
Global Markets Could Tailspin
The issue goes beyond actions, for rhetoric has the potential to cause market instability. Some of Trump’s incidental remarks about companies have had significant effects on their stocks. Tough talk on tariffs and renegotiating trade agreements foster further uncertainty in U.S. markets, driving away potential foreign investors. And with China, where a lot of Trump’s attention has been focused, the potential exists to ice a very lucrative (though surely imperfect) relationship, slowing domestic exports, which would have a profoundly negative impact on the bottom line of those previously mentioned food producers. And that’s to say nothing about the value of having an economic tie to China. Something Trump may be grasping, in that he’s now pulling back on his vow to officially label China as a currency manipulator.
While none of this has come to pass so far, as Trump’s actions on trade have translated to little more than slight policy adjustments, there’s still a general sense of international uncertainty that could be corrosive.