If President Donald Trump doesn’t end his foolish trade war with China soon, the global economy is headed for a recession, according to the global head of economics at Morgan Stanley.
Chetan Ahya told Bloomberg that he predicts a recession will begin within the next 9 months:
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A recession could begin in as soon as nine months if President Donald Trump pushes to impose 25% tariffs on additional $300 billion of Chinese imports and China retaliates with its own countermeasures, according to Chetan Ahya, chief economist and global head of economics at Morgan Stanley.
The rift between the Trump administration and China has escalated as each side blames the other for the breakdown in talks. Over the weekend, Trump celebrated his trade policies and the recent move to impose tariffs on Mexican goods in response to illegal immigration.
On Saturday, Trump appeared to double down on his threats regarding the tariffs he has already imposed on China and is threatening to place on Mexico within the next two weeks:
When you are the “Piggy Bank” Nation that foreign countries have been robbing and deceiving for years, the word TARIFF is a beautiful word indeed! Others must treat the United States fairly and with respect – We are no longer the “fools” of the past!
— Donald J. Trump (@realDonaldTrump) June 1, 2019
In a note he wrote Sunday, Ahya also suggested that even if Trump were to suddenly end the tariffs and reach a trade agreement with the Chinese, it may be far too late to head off a full-blown economic downturn across the globe:
While stocks have declined, investors are still overlooking the impact the trade war will have on the global macroeconomic outlook, Ahya wrote in a note on Sunday. Growth will suffer as costs increase, customer demand slows and companies reduce capital spending, he said.
As the negative effects of the tariffs become more apparent, it may be too late for political action, according to Ahya. Policies to ease the impact are likely to be too reactive and slow to take effect.
The only good thing that might come out of a recession? Helping guarantee that Trump isn’t re-elected in 2020.
Featured Image Via the BBC