(NAFB) — The bipartisan Congressional Budget Office says the trade war will slow economic growth, adding more fears of a possible recession.The CBO says tariffs, which reduce U.S. gross domestic product through higher prices, reduces consumer purchasing power. The report predicts the economy will grow at 1.8 percent per year over the next decade, below historical average growth rates.
Agriculture has already seen the impact of tariffs stemming from the trade war. Agricultural sales to China dropped more than 50 percent since the trade war began, and China recently announced it would no longer buy U.S. ag products. However, a range of developments, such as unexpected changes in international conditions, could make economic outcomes differ significantly. For example, if new trade agreements lowered trade barriers, economic growth could be faster than projected.
Conversely, if trade barriers rose higher, domestic investment and output could be slower than projected. Previous private firm reports have suggested the U.S. will enter a recession within the next year if the trade war escalates.
Source: National Association of Farm Broadcasters