Uncertainty Shock Dwarfs the Direct Impact of Tariffs

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(Bloomberg) --

Uncertainty Shock Dwarfs the Direct Impact of Tariffs

Head-spinning uncertainty on trade is a major drag on global growth. Indeed, analysis by Bloomberg Economics suggests the tweet is mightier than the tariff, with a bigger negative impact from uncertainty than the protectionist measures themselves. Uncertainty created by the trade war could lower GDP levels in the U.S., China and the world by 0.6%, 1% and 0.6%, respectively, by 2021 relative to a no-trade-war scenario. The tariffs themselves are likely to lower the level of GDP by about 0.3%, 0.6% and 0.3%, respectively.

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