Executive Briefings

Trump Economy Poses Big Risk, High Reward for California

California is at the epicenter of some of the most fundamental changes Donald Trump has proposed for the national economy, in trade and immigration. About 40 percent of all goods arriving in the United States by sea come through the state's ports. And more than a quarter of all undocumented immigrants in the U.S. live in California, many of them working in agriculture, hospitality and manufacturing.

So it shouldn't be a surprise that the latest report from the UCLA Anderson Forecast found that Trump's plans for the economy could deeply affect the health of the California economy, the sixth largest in the world, one way or the other.

At stake are up to 24,000 logistics jobs, 50 percent of the state’s agriculture jobs and an untold number of military manufacturing jobs, according to the report.

“We are going to see a paradigm change on these two issues, international trade and immigration, under President Trump,” says William Yu, an economist at UCLA who is a coauthor of the report. “I am optimistic about the direction we are going to see,” he added. “We aren’t going to see some kind of disaster happening next year.”

Yu says he sees only about a 10 percent chance of a trade war with China or Mexico, partly because those countries “have much more to lose than the U.S. if a trade war happens.”

A more likely outcome is that Trump gets a better deal with China, Yu says, by using Taiwan as leverage to push China to stop manipulating its currency and reduce its tariffs on some U.S. imports, for example.

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So it shouldn't be a surprise that the latest report from the UCLA Anderson Forecast found that Trump's plans for the economy could deeply affect the health of the California economy, the sixth largest in the world, one way or the other.

At stake are up to 24,000 logistics jobs, 50 percent of the state’s agriculture jobs and an untold number of military manufacturing jobs, according to the report.

“We are going to see a paradigm change on these two issues, international trade and immigration, under President Trump,” says William Yu, an economist at UCLA who is a coauthor of the report. “I am optimistic about the direction we are going to see,” he added. “We aren’t going to see some kind of disaster happening next year.”

Yu says he sees only about a 10 percent chance of a trade war with China or Mexico, partly because those countries “have much more to lose than the U.S. if a trade war happens.”

A more likely outcome is that Trump gets a better deal with China, Yu says, by using Taiwan as leverage to push China to stop manipulating its currency and reduce its tariffs on some U.S. imports, for example.

Read Full Article