Question

How would the trade war actually affect the macroeconomy of the US?

Summarize decade-long macroeconomic data in the US. Analyze US’s economic structure and argue on the severity of those impacts.

Based on your above data analysis, comment on whether President Trump's tariff and tax policies help resolve some underlying structural issues revealed from the trade war

Answer 1

Trade war occurs when one country revenge against other country by raising tarrifs or made restrictions on imports from other countries.Trade war arise due to the protectionism.These are actions taken by government to restrict international trade.Trade war,is initiated by US effect seriously to the global economy.Those countries who impose tariff cause loss in economic welfare.If tariff increases,losses in economy remains high.Trade war also effected by monetary policy and financial market.Due to trade war US federal fund rate increases quickly and it cause high domestic inflation.This financial stress effect the investment,industrial production etc.Cause decline in exports and GDP.It also reduce the foreign investment.

Tariff is the President Trump's policy tools.Trump impose 5% tariff on Mexican imports.To reduce trade deflict Trump imposed tarrifs on solar panels and washing machines.He also imposed tariff on steel and aluminum.Trump impose 15% taxes to chinese impprts.Two-thirds of the consumers good imported from china have higher tax.Tariff increase trade policy.Tariff reduced the real income in U.S and affect GDP.