OECD Says Global Economic Revival At Risk From Trump Tariffs

March 14, 2018
OECD Says Global Economic Revival At Risk From Trump Tariffs March 14, 2018 Clive Nelson https://plus.google.com/110107075468979879828/
Organisation for Economic Co-operation and Development

360b / Shutterstock.com

According to the Organization for Economic Co-operation and Development (OECD), the retaliatory trade barriers that may spring up in response to the tariffs laid by the Trump administration on steel and aluminum are a threat to the recovering global economy.

The Paris-based organization who has been monitoring the global economy for years stated that the global economy was finally showing signs of growing at the normal rate that it is accustomed too.

However, this growth is highly dependent on there being no barriers to global trade and when surprise tariffs are imposed, it could significantly alter the growth of the global economy. With the rise in tariffs between US and its global trade partners, this could potentially remove all of the positive effects that the world has been experiencing in growing trade.

In a statement, Álvaro Pereira, the OECD's acting chief economist, said

We think it is very important to avoid an escalation in trade protectionism and we strongly believe a global dialogue on excess [steel] capacity is crucial

When asked about the sudden increase in tariffs by Trump Administration, Pereira noted that in the past that escalations in trade protections were damaging to the world economy. The OECD is trying to spread this message far and wide and will place a huge emphasis on this during the G20 meeting of finance ministers which takes place in Buenos Aires, Argentina.

CBS News

As one participant privately noted, the trade tension threatens to overwhelm other topics in the meeting. There are no signs yet of the slide but the OECD is confident about its predictions.

OECD Will Have To Revise Growth Rate of Global Economy

Until recently, the OECD was confident about global growth and made a forecast for 2018 that predicted 3.9 percent global growth for all countries with noticeable exceptions like Russia. The UK was targeted as the lowest performer among the leading economies, with only 1.3 percent growth predicted for this year. The UK will go through tough times as growth is expected to slow down even more and reach just 1.1 percent in 2019.

According to Pereira, the global recovery was based on several factors that are still fragile. One part was the Trump administration's fiscal stimulus to the US economy in the form of tax cuts, while the new German coalition government's proposed increase to public spending also contributes to the improved financial outlook. The EU has retaliated to Trump’s decision to increase tariffs on steel and aluminum and announced that if this policy was implemented, the EU would increase its tariffs on American products. The OECD will have to wait and see how things work out and then make a re-calculation on the growth of the global economy.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

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