Perhaps the largest feather in U.S. President Donald Trump’s “hat” is the tax reform bill that was passed late in 2017. The bill was aimed to pump money into the U.S. economy, encouraging spending to further support local businesses. But according to a poll released by Reuters on Wednesday, the trade war instigated by President Trump against China could substantially dull the expected impacts of the tax cuts.
Though the White House hopes to sustain a solid 3 percent economic growth in the U.S., 100 economists polled by Reuters expressed doubts about this possibility, predicting a 2.8 percent economic growth this year and only a 2.4 percent growth next year. Another poll by Reuters last month showed that most economists expect the trade disputes will do more harm than good for the U.S. economy.
The U.S. trade deficit hit a 9 ½ year high in February and is expected to widen further despite Trump’s best efforts.
The dollar firmed on Wednesday, buoyed by diminishing concerns about the trade war and geopolitical tensions in Syria. The greenback was trading at 107.35 against the yen, up 0.34 percent as of 12:59 p.m. HK/SIN. On Tuesday, President Trump and Japanese Prime Minister Shinzo Abe began a two-day talk at Trump’s Florida retreat. If the talks end positively today the dollar could head higher as traders distance themselves from the need for a safe-haven yen.
The dollar was trading at $1.2376 against the euro, easing slightly. The euro had hit a three-week high against the dollar on Wednesday before retreating after the ZEW report showed that German investor morale hit the lowest level since November 2012.
With the exception of the Shanghai Composite all major global indexes were higher on Wednesday afternoon in Asia. Stocks were buoyed by strong earnings in the U.S.