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Trump trade policy may push US into recession: Study

US Republican presidential candidate Donald Trump speaks during a campaign rally on September 19, 2016 in Estero, Florida. (AFP photo)

A proposal by US Republican presidential nominee Donald Trump to impose stiff tariffs on China and Mexico could push the US economy into recession and cost 5 million Amercan jobs, according to a new study.

China and Mexico may retaliate with tariffs on US goods and services if Washington imposes tariffs on Chinese and Mexican goods, resulting in recession within three years, according to a study by the Peterson Institute for International Economics, a Washington, DC, think tank that favors free trade.

Trump’s trade plan would lead to a situation where US exports and imports would shrink, import prices would rise, stock prices would tumble and investment would plunge, the study found.

"His stated approach to the global economy of waging trade war and protecting uncompetitive special interests would be disastrous for American economic well-being and national security," according to the study authored by Marcus Noland, Tyler Moran and Sherman Robinson and Gary Hufbauer.

"Millions of American jobs that appear unconnected to international trade — disproportionately lower-skilled and lower-wage jobs — would be at risk,” according to the study.

The Peterson study showed that Washington state would suffer the largest percentage job decline, followed by Massachusetts and California.

The trade policies of Hillary Clinton, Trump’s Democratic rival, would also be costly—though far less so than Trump’s, the Peterson study said.

”While Clinton’s stated trade policy would be harmful, Trump’s stated trade policy would be horribly destructive,” wrote Adam Posen, Peterson’s president.

Both candidates are opposed to the Trans-Pacific Partnership (TPP) agreement between the United States and 11 Pacific Rim countries.

During his presidential campaign, Trump has repeatedly called for imposing high tariffs on China and Mexico and pulling the US out of international trade agreements.

Dan DiMicco, a Trump policy adviser and former chief executive of Nucor Steel, rejected the study as “propaganda” which starts from a “hysterical premise, weaves a false narrative and arrives at a preposterous conclusion.”


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