International Trade Plans May Lead to Recession

If the Trump Administration follows through on international trade plans, the United States would see increased unemployment and a recession, according to an agricultural economist at The Ohio State University.

Ian Sheldon, the Andersons Chair in Agricultural Marketing, Trade and Policy in the Department of Agricultural, Environmental, and Development Economics (AEDE), said if Trump were to implement a 45 percent tariff against China and a 35 percent tariff against Mexico, “He’s going to put the economy into a recession, if the Chinese and Mexicans retaliate, as I expect them to do.”

AEDE is a department within the College of Food, Agricultural, and Environmental Sciences.

Citing the Peterson Institute for International Economics, Sheldon anticipates that within three years of the launch of a trade war, U.S. inflation would increase due to rising import prices and to a Federal Reserve response of raising interest rates on top of the expected increases this year. As a result of the increased cost of borrowing, investment would decline, pushing the economy into recession within three years, leading to the loss of 4.8 million to 5 million jobs.

Read more.