US default could trigger the world financial crisis

The global economy is in a precarious and unstable situation now. The US-China trade war could trigger global financial crisis, RISS expert Vyacheslav Kholodkov considers. He recalled Japan's recent increase in trade tariffs on South Korean high-tech goods, as well as India's increase in import duties on certain goods from the USA. "If the US-China trade war continues, the threat of a global crisis will increase significantly," he said.

V.Kholodkov noted that the current trends in US economy had caused an alarm among the experts. The problems in US economy lie in the growth of public debt and trade deficit. According to RISS expert, D.Trump's efforts to reduce the trade deficit had failed. "Compared to the year before, the trade deficit has increased by more than 10% (it came to $807 billion in 2017, and to $890 billion in 2018). Almost half of this amount is US-China trading. As for the US national debt, it was equal to $20 trillion since D.Trump entered the White House. Now the US national debt has climbed above $22 trillion," he said.

RISS expert pointed out that the US government had incurred a budget deficit of almost $780 billion in 2017. The US federal budget deficit is expected to top $1 trillion in 2020. "Moreover, the US budget deficit is growing rapidly now. Trump’s tax cut didn’t reduce it despite his many promises. Tax revenues increased by only 3% instead of the expected 6%. For this reason, the threat of US default is real, and the USA could hit debt ceiling in early September," V.Kholodkov said.

He also drew attention to the fact that there were a lot of Trump's opponents both among Democrats and Republicans. "If they want to play a dirty trick on Trump, they will refuse to increase the debt limit. In this case, the US government will be forced to default," he concluded.

economy USA