Matt Grudnoff
Senior Economist

Trump’s tariffs are not enough to push the Australian economy into recession. Our goods exports to the US make up only about 1% of GDP and 10% tariffs doesn’t mean that all exports to the US stop. They might just drop a little.

But what about if the US economy goes into recession?

The main fear is that if the US economy goes into recession, this might weaken the world economy including Australia’s major trading partners. This would have a bigger impact but even then, a recession is not likely.

Remember the rest of the world is not putting up trade barriers between each other. If they are putting up trade barriers it is only between themselves and the US. This might well have a large impact on the US, but only a moderate impact on the rest of the world.

At the moment Treasury is predicting that the trade war will only shave 0.1% off economic growth.

While it might make for exciting headlines, a recession at this stage is unlikely.