Skip to main content

Higher trade barriers, including President Donald Trump’s tariffs, are taking a toll on the U.S. economy as rising domestic prices reduce consumers’ purchasing power and increase the cost of business investment, congressional budget experts said on Wednesday.

The non-partisan Congressional Budget Office said changes in U.S. and foreign trade policies since January 2018 will reduce inflation-adjusted U.S. gross domestic product by 0.3 per cent from what it would be otherwise in 2020.

Tariffs are also expected to reduce real income for the average U.S. household by 0.4 per cent, the CBO said in an updated economic forecast.

“Tariffs also affect business investment by increasing business’ uncertainty about future barriers to trade and thus their perceptions of risk associated with investment in the United States and abroad,” CBO Director Phillip Swagel said in a statement.

The budget office left its economic growth forecast for 2019 unchanged, at 2.3 per cent. Though down from last year’s 2.5 per cent growth rate, the CBO projected that higher discretionary spending by the federal government would offset downward pressure from trade issues, including reduced exports.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe