Trade to shave 0.3% from U.S. GDP

• Higher trade barriers, including U. S. 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 Wednesday.

The 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.

“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, the CBO projected higher spending by the federal government would offset downward pressure from trade issues.

Trump told reporters on Wednesday his life would be easier if he had not mounted a trade war with China. But he defended his actions and said he believed a trade deal was still possible.

“I am the chosen one ... so I am taking on China. I’m taking on China on trade. And you know what? We’re winning,” Trump said.