- Feb 22, 2017
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Trump is obviously playing a game of "tariff chicken" here. He's betting we still have enough economic influence in the world to cause a couple of large countries to blink and start a chain reaction.Tariffs are taxes on trades.
Will it work? I don't know. Now that our dicks are in the wringer, I sure hope so.
But this trajectory won't continue, even Trump knows that. We can't extrapolate out very far in this situation, because conditions are going to change.
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Part of the problem here is that Trump makes it impossible for other world leaders to “give in” and still save face in their own countries. This will prolong and deepen the trade war.
The Fed has already lowered its GDP forecast for the current quarter, with the NY Fed showing it in the 2s again and the Atlanta Fed has dropped from over 4 to mid 3s and they were way high last quarter on their forecast.
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