US economy under recession threat

The trade war between the United States and China will determine crucial aspects of international relations for more than 30 years, RISS expert Vyacheslav Kholodkov believes. He recalled that average duties on Chinese goods had been far lower a few years ago than now (3.1% and 21.5% respectively). At the same time, the global economy is under recession threat. The American President has recognized this fact, saying that the USA has not experienced such a difficult period during the last 57 years.

RISS expert said that, according to the American Institute for Supply Management, the US manufacturing sector had fallen by 1% for the first time during the last three years. This is very problematic for small and medium-sized enterprises. To promote his tax reform ($1.5 trillion tax cut), Trump promised the growth in the number of jobs. But in fact, US economy added only 156 thousand jobs during the last three months. Moreover, the US industrial sector provided only 3 thousand jobs. The most obvious evidence of the upcoming economic crisis is the inversion of the US Treasury yield. In particular, the 10-year Treasury yield has been twice lower than the 2-year Treasury yield during the past two weeks.

"The American economy is heading for a recession. This will cause a financial crisis in the world economy. And it's already happening. The Bank of Japan announced that for the past 8 months for this year, investment in fixed assets had fallen by 5.6%, and China exports had fallen almost twice. At the same time, Seoul's exports to China fell by 21.5% in August. South Korea's exports dropped 14%. N.Ferguson from Stanford University underscored that US-China trade wars had gone beyond the critical point, and Trump could not change anything. This situation resembles the beginning of the cold war," V.Kholodkov concluded.

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