Trump’s asking for a recession if ‘he doesn’t resolve China,’ strategist says

Jim Young | Reuters

President Donald Trump leads a Cabinet meeting on day 12 of the partial U.S. government shutdown at the White House in Washington, U.S., January 2, 2019.

“If (Trump) doesn’t resolve China, he is asking for a recession, I think that’s a given because you can’t have two major uncertainties at the same time,” Harris added.

The U.S. government has been partially shutdown for 16 days, given that the Democrats and Republicans cannot reach an agreement over the funding for Trump’s wall on the border with Mexico.

With key national authorities closed, certain services cannot be provided —including delay in processing tax refunds and loan approvals for small businesses by the SBA (Small Business Administration). This increases pressure on the country’s economy.

Christian Keller, Head of Economics Research, Barclays told CNBC’s “Street Signs” that Beijing and Washington are likely to deliver some positive news to the market over the coming days.

“The longer-term issues regarding technology, all the issues about national security and G5 issues, I think that will take longer and that might not be resolved at all, because we strategically think that this is a clash of giants… But for the short term for the market on specific trade issues I think we will get something over the next coming days,” he said.

“(Trump) has reduced his negotiating power with China. If we see a resolution on China, which would be pretty crazy for Trump not to pursue that, because if there is a recession in History it will be called the Tump recession because this is not a required recession,” Harris told CNBC.

The U.S. economy grew at an annual pace of 3.4 percent in the third quarter of 2018. The latest jobs report also showed an increase of 312 000 new jobs in December, much higher than expectations.