U.S. Trade Flows Face Strong Headwinds Amid Economic Downturn
The economic downturn already underway as the world struggles to fight the coronavirus pandemic will engender a sharp contraction of U.S. and global trade flows that economists say could be mitigated -- somewhat -- by aggressive stimulus measures.
Economic stimulus measures already underway or likely to be implemented -- the Federal Reserve’s lowering of interest rates, for example, or help for most-affected industrial sectors and direct payments to Americans expected to be agreed to by lawmakers this week -- are likely to have a positive, albeit indirect, impact on trade, these economists tell Inside U.S. Trade.
While most agree that a recession is all but inevitable, the length and severity of that recession remain an unknown. During economic downturns, trade typically contracts at much steeper rates than GDP. Efforts to stabilize the economy -- if successful -- could blunt the impact on trade, according to these economists.