Expert Commentary: outlook on G20 summit

Some experts suggest that environmental regulations, such as the US decision to quit the Paris Climate Agreement, are likely to have a zero impact on the US economy. Do you share this point of view? Why?

It depends on a period of time that you are talking about. I think that in the long run it has a negative impact. I believe that the energy sector, especially alternative energy sources, hold tremendous opportunities for economic growth. If the US is not going to push in that direction, then other counties will take that growth away. Thus, I think that within the next two years there may be no effect, but, going forward, it has a negative impact on the US economy.

The White House was pushing for more gas, oil and coal production to make the country a major energy exporter. How do you evaluate the outlook of the US energy industry?

At this point in time, the outlook looks really positive to me, especially given all the fracking capabilities that exist. I do not know much about coal in terms of export, but I do not think that it is going to create a large amount of either export value or jobs, because the major buyers, in particular China, are looking to get out of coal. In other words, having US as a major exporter, especially in gas and oil, is already something that is occurring and is definitely positive for the domestic economy.

The EU and Japan are set to sign a trade agreement and sweep away import tariffs. Analysts expect the deal to have only positive impact on exports and economies of both. Are you of the same opinion? Why?

I think it is a threat to the US in the sense that Asia and Europe become more closely-linked and this will open up opportunities with other counties in Asia. I suppose it will work for both countries, as they will not have to focus on the US, they would just expand the two very big markets with a potential to bring that to other large segments in Asia. It is certainly good for Asia and the EU, but not necessarily good for the United States.

Economists are worried that there could be an outbreak of trade war between the US and the EU. Do you think it is likely to happen? Could you elaborate on this?

I do not think there will be a trade war; there could be some skirmishes, though, but a full-out war is not likely. Both sides understand that the relationships are too deep and too large to get into a mess of war, but arguments are possible. Solely because of political imperialism, the US may require the administration to show that it is being strong; however, whether it makes sense or not on an economic basis is a different story, but on a political basis it could create some quarrels.

Ph.D. Joel L Naroff

President at Naroff Economic Advisors