There are bad and good recessions. From Tom Mullen at lewrockwell.com:
When the market imposes a recession it’s cleansing; when the government does so it is the opposite
Equity markets continued to sell of Monday morning as Trump economic advisor Peter Navarro told CNBC that even a 0% tariff offer from Vietnam would not be enough for the Trump administration to change its tariff policy toward that country.
“Let’s take Vietnam. When they come to us and say ‘we’ll go to zero tariffs,’ that means nothing to us because it’s the nontariff cheating that matters,” said Navarro.
Non-tariff cheating refers to subsidizing domestic manufacturers, currency manipulation, and other measures designed to give a country’s domestic producers an advantage over potential exporters to that country.
Navarro’s comments seem to indicate the administration is committed to maintaining tariffs not only until trading partners lower or eliminate their own, but rather until no trade deficit at all exists between the U.S. and that country. This means that even countries with a natural comparative advantage in some export – or no need for many potential U.S. imports – may see U.S. importers of their products taxed indefinitely.
Stock market selloffs don’t always mean a recession is imminent, but they usually precede one. And to the extent that the input costs may be artificially higher for not only importers of finished goods but also of components for products manufactured in the U.S., a recession would be natural result.
