US-China Trade War Fuels Recession Fears, Will It Hurt Trump In 2020?

The strength of the U.S. economy has been the central pillar of President Donald Trump's reelection strategy, and for every incumbent president, avoiding a recession has been a determining factor in whether or not they win a second term.

As Trump addressed a crowd of workers at the Shell Petrochemicals Complex outside of Pittsburgh, touting record low unemployment and half-million new manufacturing jobs, the effects of the U.S.-China trade war were looming.

On Monday, markets took a dive as it appeared trade negotiations between Washington and Beijing were at a total impasse and the Trump administration was poised to tax the remaining balance of U.S. trade with China by Sept. 1. Markets bounced back Tuesday on the news that the administration was postponing tariffs on consumer goods, including cellphones, laptops and toys through December.

Before leaving his New Jersey residence, Trump told reporters the delay was "for the Christmas season, just in case some of the tariffs would have an impact on U.S. consumers."

Even with the good news, the trade war has prompted several top financial institutions to raise the specter of a recession. This week, Bank of America reported that the odds of a recession occurring within the next year had increased to 30%. They cited the trade war, slower economic growth and the limited ability of the Federal Reserve to stimulate the economy with rate cuts.

Republican strategist Ford O'Connell explained that the trade war hurts Trump's chances of reelection "in the sense that his calling card is the economy and history dictates, going back to FDR, that if you avoid a recession you will be reelected as an incumbent president."

It is also clear that barring a major economic, military or political disaster, 2020 will be a close election that will come down to a handful of battleground states. The states that are in play are largely in the industrial Midwest, parts of the south and the farm belt, where Trump's tariff policy has hit home.

"About four of those states are favorable to Trump's strategy but he's also recognizing there's only so much pain they can take at the moment," O'Connell said.

The Democratic primary has, so far, featured little discussion of those issues.

"It's clear that the Democrats, for whatever reason, seem to have no answer for China," O'Connell said. "They're barely even acknowledging what a longterm threat it is to the U.S. both economically and militarily. You'd think they just woke up to this fact."

Read more from Leandra Bernstein at WJLA

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published this page in In The News 2019-08-13 23:00:59 -0400
Analysis & Political Strategy