The consensus among economists is that President Donald Trump’s tariffs on foreign imports will hurt long-run economic growth, but they appear to be giving the economy a short-term boon, helping propel growth to an expected four-year high in the second quarter.
The federal government will release second quarter growth figures Friday that are expected to hit levels as high as 5 percent, marking the highest second quarter growth levels since 2014. Preliminary numbers generally peg growth at over 4 percent. (RELATED: Economists Predict Trump’s China Tariffs Will Cost The U.S. Economy 190K Jobs)
Trump promised the “best financial numbers on the planet” leading into Friday’s rollout, adding that it was great to have the U.S. “winning again.”
Our Country is doing GREAT. Best financial numbers on the Planet. Great to have USA WINNING AGAIN!
— Donald J. Trump (@realDonaldTrump) July 24, 2018
Economists attribute the president’s tariffs for up to 1 percent of the total expected growth in the second quarter. The consensus is that an increase in consumer spending from the first to the second quarter, along with a narrowing trade deficit, helped propel the economy to higher levels of growth. U.S. exports rose in the second quarter, while imports remained relatively stagnant.
Another factor economists note is that investors and producers are moving products and investments around in response to both the tariffs the administration has already imposed and those it could levy in the coming months. Some point to the week-to-week rise in soybean exports — an American industry that has repeatedly cried out against the president’s tariffs on Chinese goods — as evidence that investors are making moves in preparation for tariff escalation. Weekly data shows an uptick of up to 35 percent increase in soybean exports in the second quarter. (RELATED: Mnuchin Says ‘Don’t Minimize’ The Threat Of Tariffs On All Chinese Goods)
Despite expectations of second quarter growth, economists expect the momentum to taper off in the third quarter, citing narrowly distributed benefits from the second quarter that could work to retard growth.
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