A Recession May Be Looming. Here's How Trump Can Protect the Economy
As the nation balances between economic expansion and a potentially disastrous downturn, President Donald Trump needs to take several steps to secure our country’s economy:
No more shutdowns. Last month, President Trump signed bipartisan legislation to avoid another government shutdown — a needed reassurance for consumers, investors and the economy. But the record-setting federal government shutdown in January cost the U.S. economy $11 billion, according to the Congressional Budget Office, and hurt consumer and investor confidence. Government shutdowns are the result of bitter partisan disagreements, and areunfair to government workers, contractors, small businesses — and the American people. Our political leaders must do better.
To resolve political divides over border security, stakeholders should appoint an independent commission of security and border patrol experts with input from both parties to make decisions to allocate funds for border protections. In the case of the border controversy, this type of commission may find that innovative technology such as drones would protect certain areas far more inexpensively and effectively than a barrier would. On divisive issues such as border security and immigration, elected leaders need to compromise for the good of the country.
End the trade war with China. Tariffs are taxes. And with the administration’s tariffs on imported products costing the U.S. technology sector an estimated $1 billion a month more than usual, our economy can’t afford the strain of further increases. The U.S. and Chinese economies are intricately bound together, and global economic stability is dependent on our two countries working together. I'm thrilled by the Trump administration’s recent decision to avoid raising tariffs to 25 percent, avoiding a global downturn.
Work with our allies on ways to target and disincentivize China’s harmful trade practices. Instead of tariffs, we should sign trade deals like the now-defunct Trans-Pacific Partnership, which would deepen economic ties between the U.S. and nations in Asia, creating a counterweight to China’s regional influence. We can also focus on the World Trade Organization, where the U.S. is encouraging reform to the system. And we can work with our allies to foster trade in new areas such as the digital economy; with greater strength in numbers, the U.S. and its allies can work together to encourage China to open its markets.
Stop protectionist posturing with Europe. Last year, President Trump threatened to impose 20 percent tariffs on all vehicles and auto parts coming into the U.S. But analysts estimate that U.S. tariffs on the European automotive sector could cost Europe as much as $75 billion, potentially leading to less trade. The EU is one of America’s largest trading partners, with trade between the two worth over $1.1 trillion annually. Europe is our ally and strong trading partner, and our nation’s economy can’t thrive if Europe’s economy suffers.
Invest in infrastructure. Our decaying infrastructure hurts our national competitiveness. In his State of the Union, President Trump affirmed his commitment to infrastructure investment in 2019. The U.S. needs to invest some $4.5 trillion by 2025 to improve our country’s infrastructure, and areas such as fiber deployment and self-driving transportation are especially critical to our economic development. Now, the president must follow through on his promise. These new technologies will boost our economy and create U.S. jobs. Next-generation 5G connectivity — a critical platform technology for innovation — could create up to three million new jobs, and the self-driving vehicle market could grow to $556 billion by 2026.
The United States is experiencing the second-longest economic expansion in its history, and the IMF predicts U.S. growth will hit 2.7 percent this year, a level of growth not achieved since 2006. If the White House takes these common sense, pro-innovation steps, we can protect our economy and continue to propel our nation forward.
Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing more than 2,200 consumer technology companies, and a New York Times best-selling author. He is the author of the new book, Ninja Future: Secrets to Success in the New World of Innovation. His views are his own.