Global Economic Growth Is Already Slowing. The U.S. Trade War Is Making It Worse.
Volkswagen, the world’s largest carmaker, said last week that sales in China fell 7 percent from January through May, to about 1.2 million vehicles. Largely because of China, Volkswagen’s global sales fell 5 percent during the same period.
“We are experiencing the biggest decline in the world auto market in 20 years,” Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen, said in a report. If Mr. Trump follows through on threats to impose further tariffs on China, Mr. Dudenhöffer said, “there is danger of a global auto crisis.”
Germany’s central bank has slashed its forecast for growth this year to 0.6 percent from 1.6 percent. That bleak change came “mainly due to the downturn in industry, where lackluster export growth is taking a toll.”
“The fear factor, the uncertainty, is denting willingness to spend, willingness to invest,’’ said Carsten Brzeski, chief economist for Germany and Austria at ING in Frankfurt. “It’s therefore undermining growth in the eurozone.”
And in Australia, where an almost 28-year-old expansion is looking less secure and the central bank recently cut rates for the first time since 2016, economic officials are watching trade wars warily. Reserve Bank of Australia Governor Philip Lowe called international trade disputes “the main downside risk” in a recent news conference.
If coming trade negotiations don’t end in a resolution, the United States and its companies could also pay a price, leaders of the Business Roundtable, a corporate lobbying group in Washington, warned last week.
“The biggest self-inflicted risk to growth today would be trade going south,” said Jamie Dimon, chief executive officer at JP Morgan Chase.