The recession of the United States does not seem more likely

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Your guide to what the second period of Trump means to Washington, business and the world

The writer is the director of economic policy studies at the American Institute of Institutions

If an American president wants to send the American economy to recession, then leading tariff prices to levels that have not been seen more than a century ago and that a real embargo on China would be a good strategy.

The recession engineering was not the goal of Donald Trump when he launched his commercial war in the spring, but investors were less interested in his motives than the effects of his policies and the atmosphere of the chaos he created. The values ​​of stocks and dollars decreased, while bond returns – economists went to monitor the recession.

But Trump’s amazing decision on Monday to reduce the rate of tariffs on Chinese imports by 115 percentage points led to the rise in markets and led the economists to prolong their chances of contraction. And then. This year’s recession is unlikely. Trump appears to be keen to cancel the conflict’s behavior with China, Argument He does not want to “harm them” and praises his “very good” relationship with Beijing. Treasury Secretary Scott Payett was the strongest, Saying: “None of the sides want a detailed chapter.”

Trump also seems to want to cancel the manufacture of his trade war in general. Kevin Haysit, director of the National Economic Council, said last Friday that twenty commercial deals “are this close to their solution?”, Which he said “will be very stable for markets.” On Thursday, Trump was talking about a possible trade deal with India.

Another reason for the most optimistic economic expectations is that over the past few weeks, Trump has revealed his willingness when the markets apply enough pressure. After the negative market reactions, “Tahrir Day” placed the so -called mutual definitions on the ice. Although he continued to obtain Federal Reserve Chairman Jay Powell, he has now clearly stated that he has No intention to launch it.

As with pressure from the market, Trump’s bad reconnaissance numbers will eventually lead him to Pivot. Noticeably for the president who was largely elected to treat high prices, its total net classification – under water by 10 percent – is now outperforming its classification on trade (minus 15 percent) and inflation (minus 26 percent), according to a recent poll.

Even allowing the phone call this week, Trump has increased the average effective tariff in the United States by about six since he took office in January. It will become less popular, including among Republicans, with consumer prices rising. As this session is exposed, the increasing concern about the medium renewal elections means that the members of his party will find increasingly courage to speak publicly against its definitions.

Moreover, the trade war is already dealing with most political oxygen in Washington, which exposes its efforts to expand the provisions of expiration from the 2017 tax cuts. Trump appears to be certain that it reduces customs tariff rates before allowing the republican elections to be clarified and an enormous tax increase next year.

Another reason for the most optimistic expectations is the elasticity of the American economy in the past two months. Last month, employers Add More jobs for net salary statements in January or February this year, and the unemployment rate has not increased.

Monthly salary statements are made during the wage period that included April 12, which gives us a window in the performance of the labor market in the first half of the month. This is before a lot of damage to the trade war occurred, but there was No significant increase In new claims in favor of unemployment for weeks ending April 26, May 3 or 10 May.

At the same time, and Address drop In the growth of GDP in the first quarter was deceptive. In the last quarter, US Department of Commerce data showed that real consumer spending grew by 1.8 per cent of the end of 2024. The firm investment in business reversed its decrease in the fourth quarter, adding 1.3 percentage points to the growth of the first quarter. For the first quarter of 2024, the real gross domestic product grew by 2 percent.

In order to be clear, the cancellation of the escalation on Monday does not deserve to open the champagne. The economy is not outside the forest-the average effectiveness of the United States is still higher than it has been since it has been since the era of SMOOT-HaWLY in the 1930s.

Less number of container ships in American ports indicate that at least some shelves will be empty and that transport hairstyles and warehouse workers are possible. The customs tariff will raise the prices of consumers, which reduces real income and leads consumers to reduce spending. The United States manufacturers import spare parts and equipment, so the customs tariff will reduce their competitiveness and Reducing their request For workers. The tremendous uncertainty of Trump’s volatile policy in commercial investment and expansion will be.

My optimism may be in its place. In the first sign of problems in difficult economic data, companies may begin to lay down workers and freeze their spending. Small companies may not be able to weather up to a few months of large increases in the cost of imports. Given High anxiety In medium -term inflation expectations, the Federal Reserve may not be able to reduce prices to reduce the strike from low income and weakest demand.

However, Trump’s passion for eliminating escalation, desire for the axis and elasticity of the economy indicates that the United States can avoid the worst. This does not mean that it will achieve the best. Trump’s trade war is still an amazing act of self -sabotage that will slow down and increase unemployment. Avoid stagnation is the scale of deviant and tragic success.