Trump's trade war with China is the biggest threat to the US economy in 2019, and it's making economists the most worried they have been in years

Sean Gallup/Getty ImagesUS President Donald Trump
  • President Donald Trump’s trade war with China was the top 2019 concern cited recently by US economists.
  • Eighty-five per cent of economists surveyed by The Wall Street Journal also said risks for the US economy were tilted toward the downside, the most in at least three years.
  • Only four economists agreed with Trump’s suggestion that the Federal Reserve was the biggest threat to the economy.

Some of the US’s top economists are the most worried they have been in years about the country’s economy.

According to The Wall Street Journal’s monthly survey of economists, about 85% of those surveyed said the risks for the US economy were tilting to the downside – the most since at least the start of 2015.

And their biggest fear? President Donald Trump’s trade war with China:

  • Overall, 47.3% of the economists surveyed cited the back-and-forth tariff fight between the US and China as the top threat to the economy in 2019, the highest percentage of any single threat.
  • 20% cited financial-market disruptions as the largest threat.
  • 12.7% pointed to a slowdown in business investment.

The recent spate of trade fears has been blamed for both the sell-off in US stock markets and businesses’ slowing of capital expenditures.

Meanwhile, economists don’t agree with Trump’s claim that the Federal Reserve’s recent interest-rate hikes are the biggest threat to the economy. Only 7.3% of the economists surveyed – four out of the 60 respondents – cited the Fed as their top fear. Fed rate hikes actually came in fifth on the list of risks, as 9% of those surveyed cited slowing global growth as their top concern.


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The Journal survey seems to align with what major economists on Wall Street have forecast for the year ahead. Economists at JPMorgan, Bank of America Merrill Lynch, and Goldman Sachs agreed that US gross domestic product growth would slow in the second half of 2019, and they say the trade war could make such an economic slowdown even worse.

While none of the Wall Street banks predicted a recession, they also suggested the economic risks were firmly titled toward the downside.

The US and China have imposed tariffs on $US360 billion worth of goods flowing between the two countries: The US slapped tariffs on $US250 billion of Chinese goods, and China responded with duties on $US110 billion worth of US goods.


Read more:
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While the two sides have shown signs of agreement, the tariffs are still in place, and the negotiations are fraught with potential pitfalls.

The fear is that keeping existing tariffs in place for a longer period of time, increasing those tariff rates, and imposing new tariffs will drive up prices of imported goods for US consumers and businesses. This would slow investment and consumer spending, harming GDP growth.

While signs of consumer inflation from the tariffs has been limited to a few items, businesses are already reporting cost pressures and disruptions from the trade war. And the longer Trump’s fight with China continues, the more likely it starts to reach the average American consumer.

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