The escalating trade war between the USA and almost every one of the main trading partners has triggered a number of predictions and concerns that a global recession could be at the door.
And economists who spoke to CBC News say that one is practically inevitable, Unless we will soon see a big pivot point from the USA.
“I don’t know how we would avoid it,” said Mark Zandi, chief economist at Moody’s Analytics, to CBC News’ Power and politics on Monday.
“This is a fairly dark scenario, both for the USA and for the rest of the world.”
According to US President Donald Trump, the brokerage company JP Morgan announced the probability of a global recession to 60 percent, from 40 percent at the end of March the opportunities of global recession.
When the global tariffs of US President Donald Trump counteract the global tariff, Moody’s chief economist Mark Zandi said that Power & Politics should probably meet global recession in June or July and will not return if the United States cannot de-escalate soon.
“We haven’t seen this type of collective bargaining war for 100 years,” said Moshe Lander, Senior Doctor of Economics at Concordia University, and referred to the US tariffs after the 1929 stock exchange crash.
These tariffs would have gone backwards when Washington’s trading partners returned, he said.
“Enter one while we speak”
A recession is traditionally defined as two consecutive quarters of losses in a country GDP. In a global recession, these losses would occur in several economies worldwide, says TU Nguyen, economist at RSM Canada.
There is no “set-in-stone” definition of how many countries have to be in turmoil, she said, but with large economies, including China and the European Union, are all confronted with heavy US tariffs. Writing on the wall is clear.
“If the United States does not change its political attitude towards tariffs … we would expect a recession to be defined in the next six months,” said Nguyen.
“I think it is reasonable to say that we enter you while we speak.”
Zandi predicts that the United States would feel the effects of a recession until June or July if Trump “does not find an off-ramp”.
The conflict between the United States and China, the “two largest economies on the planet according to order of magnitude”, is one of the greatest hurdles, he said.
Investors all over the world put alarm bells after a third day of customsization market chaos, with a billionaire Trump allied even warned that the non-retreat to tariffs could unleash a “self-induced, economic nuclear winter”.
After China Trump’s tariffs matched, he raised even more – which means that imports from China, when these latest tariffs start on Wednesday, will be a amazing 104 percent.
“If both countries further increase their tariffs for action, we will have very little trade between the two countries and the consequences of it will only be very difficult to overcome,” said Zandi.
Global vs. national recessions
A global recession cannot be felt equally in all countries. For example, Canada went through a time with reduced economic activity during the global financial crisis of 2008, but “all right,” said Nguyen.
However, Canada’s positioning in this surprise does not look good.
Andrew Dicapua, the main economist of the Canadian Chamber of Commerce, says that Canada has been spared from the tariffs of the past weekPresent “The reality is that Canada and Mexico inevitably have the worst effects when the United States penetrates a recession in view of the integrated integration of our economies.”
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Just as the global tariffs will have an impact on Canadian GDP or the labor market, although March recorded a decline of 33,000 jobs in the midst of tariff fear and the growth observed at the end of last year.
However, economists assume that consumers, if global tariffs were less accessible and more expensive, withdraw from purchases and investments, which dampens demand and increases the likelihood of layoffs.
“Discharges are already beginning, especially in sectors that are closely connected in US supply chains such as cars, and we begin to see that this is reflected in the labor market data,” said Dicapua.
A reduced attitude and more companies that go under will follow in a recession, which makes it more difficult to maintain increases or to change jobs. In the meantime, life is becoming more expensive.
“The typical American household has to spend a year more to buy the same goods as today,” said Zandi.
There is still a way to avoid a global recession, but that would depend on the fact that the United States drastically reduce or eliminate its tariffs.
“The off-ramp to avoid this has to come from the USA,” said Nguyen, adding that speed is of crucial importance.
“The longer this works, the more layoffs will take place, the more factories are simply closed because they cannot operate according to the rules of the new tariffs.”
The Trump government has planned talks with South Korea and Japan, and Italian Prime Minister Giorgia Meloni will visit next week. But at the moment, all country -specific diploma is moving ahead.
“The most important thing you should remember is that this is completely induced by the United States,” said Nguyen. “It is not something that we have made blind, for example, how the Covid 19 pandemic was blindly. But it affects the whole world.”
