"If implemented, these proposals would provoke retaliation by U.S. trading partners," the study said. | Getty Study: Trump’s trade proposals ‘horribly destructive’

Donald Trump’s threat to raise tariffs on China, Mexico and other countries to force them to negotiate better deals with the United States “could unleash a trade war that would plunge the U.S. economy into recession and cost more than 4 million private sector jobs,” says a new study by the Peterson Institute for International Economics.

The nonpartisan think tank, which leans pro-free trade, outlines several scenarios that could result from the Republican nominee's plans to raise tariffs and withdraw from trade deals, including the sweeping Asia-Pacific pact that the Obama administration wrapped up last year. Its conclusion: Trump’s assault on NAFTA, China, the Trans-Pacific Partnership and other trade deals would harm average American households, worsen income stagnation, devastate businesses and erode national security — and he would have the statutory authority to do it.


"If implemented, these proposals would provoke retaliation by U.S. trading partners, unleashing a trade war that would send the U.S. economy into recession and cost millions of Americans their jobs," the study says.

Trump’s top trade advisers dismissed the study as biased Monday, saying it comes from a corporate-funded think tank and “signifies nothing.”

“They are the pimps of globalization for the corporate interests who have sent American jobs overseas and basically turned America into a stagnant economy,” said Peter Navarro, an economics professor at the University of California, Irvine who has helped Trump develop his trade policies.

Nearly half of the Institute’s revenue comes from major export-oriented corporations like Caterpillar, Pepsi and United Technologies, according to its website.

The study comes as Trump and Democratic nominee Hillary Clinton rail against past trade policies for inflicting job losses and economic pain among working-class voters. President Barack Obama, who is pressing Congress to ratify the massive Trans-Pacific Partnership before he leaves office, has pushed back against both candidates’ trade stances.

While the Peterson Institute also faults Clinton’s proposals, which call mainly for tougher enforcement, as leading to “stasis” in the expansion of trade, it reserves the bulk of its criticism for Trump. His policies “are another matter altogether” and could have disastrous consequences for the economy and for national security, the study says.

Its projections are built on an earlier Moody’s Analytics study that estimated the economic effects of Trump’s call for steep tariffs on Mexican and Chinese imports and the renegotiation of trade deals like NAFTA. Under the worst-case scenario, U.S. employment could drop by nearly 5 million jobs in 2019, with states like Washington, California, Massachusetts and Michigan suffering losses of nearly 5 percent of private-sector jobs, the think tank says.

“Even if the statements are strategic, acting on them can, intentionally or not, produce escalating cycles of retaliation by trading partners,” the Peterson Institute says. “When planning a war, it is not advisable to assume that one’s adversary will surrender when the first shot is fired. For these reasons, Trump must be taken at his word.”

But Navarro, Trump’s trade adviser, says his Trump’s threat of tariffs is not an endgame but “simply part of an overall negotiating tool which is designed to get better and fairer deals.”

Another Trump adviser, Nucor steel company CEO Dan DiMicco, quipped that the study is designed to scare voters and “should have come out on Halloween.”

But DiMicco said Trump’s threats are "very real, and our trading partners who are cheating should take it very seriously." Unchecked government subsidies and currency manipulation are just some of the ways other countries are gaining an unfair trade advantage, he said.

Trump could execute his stated plans to stop countries like China from “cheating” through executive powers that allow the president to raise tariffs unilaterally, the study finds. The nominee even went so far as to lay out the statutes he would invoke to retaliate against China’s “illegal activities” in a June 28 speech. Many of the authorities allow the president to hike tariffs or restrict imports in other ways based on broad interpretations of national security.

U.S. companies couldn’t count on lawmakers or the courts to act fast enough to head off any initial economic shocks caused by Trump’s policies, the Peterson study says.

“At least for a few years, a President Trump would have the stronger legal hand and his actions would very likely survive challenges in the U.S. courts and Congress,” it says.

Legal action challenging the statutory authority could take months or even years, and any efforts by major U.S. importers like Apple to seek rapid relief through preliminary injunctions to stop Customs and Border Protection from collecting those duties would face legal uncertainty, the authors write.

Even if Trump threatened high tariffs only as a tactical maneuver, “foreign countries will soon retaliate,” they say.

Countries "will not patiently wait for U.S court proceedings or litigation in the WTO to vindicate their claimed rights under international law — specifically the right to export to the U.S. market at low [bound] tariffs, or duty free,” the authors say. “Enormous economic damage to U.S. firms, workers and communities could ensue from a trade war long before the legal battlefield is cleared."