Trump's trade war could lead to a growth downgrade, according to the director of the Congressional Budget Office.
The head of the nonpartisan Congressional Budget Office (CBO) said Trump's trade war has had enough of a negative effect that the office may soon need to downgrade the rate of growth of the U.S. economy.
"We may even make a point this summer to redo our forecast and maybe even downgrade it a little bit," CBO Director Keith Hall told CNBC on Wednesday. "Tariffs are taxes. Taxes slow down the economy."
Hall added that the CBO expects "a drag on growth" in the economy if the trade war continues.
Trump's choice to introduce punishing tariffs on foreign goods has resulted in a trade war, as governments like China's have responded in kind by levying tariffs on American goods.
Trump recently hosted talks with Chinese negotiators that failed to result in a trade agreement to end the standoff.
Trump recently authorized a second multi-billion-dollar round of taxpayer-funded payoffs to farmers, a measure intended to supplement the revenue that is no longer coming in from consumers in China.
The bailout does not rise to the same level of income farmers would have made without Trump's trade war, however, and uses tax money that wouldn't have to be spent under normal circumstances. Some farmers have slammed Trump for wreaking havoc on their livelihoods, and for offering them only a temporary, inadequate fix instead of a real solution.
Despite the policy's shortcomings, Trump has been supported by many Republican senators whose constituents are hurting from the tariffs. One senator, Sen. Tom Cotton (R-AR), even said farmers should be happy to make the "sacrifice" of letting their business suffer for Trump's demands.
Manufacturing and other sectors are also suffering. The beer industry has seen its production costs artificially rise thanks to Trump's tariffs, and even children's toys cost more now thanks to Trump.
Trump inherited an economy in recovery thanks to the policies enacted by President Barack Obama. But Trump's trade war — a war he said would be "easy to win" — now threatens to undo the advances made over the last decade.
Published with permission of The American Independent Foundation.