The U.S. economy could be $1 trillion smaller than otherwise expected in 2021 if Republican candidate Donald Trump wins the presidential election in November, economics research firm Oxford Economics said on Tuesday.
While the firm said Trump's policies - including more protectionist trade measures, tax cuts and mass deportation of illegal immigrants - may be watered down in negotiations with Congress, they could have "adverse" consequences.
"Should Mr. Trump prove more successful in achieving adoption of his policies, the consequences could be far-reaching – knocking 5 percent off the level of U.S. GDP relative to baseline and undermining the anticipated recovery in global growth," it said.
Oxford Economics describes itself as an independent global advisory firm. They are headquartered in Oxford, England, but have offices around the world including Chicago, Miami, Philadelphia, San Francisco and Washington.
Under its baseline scenario, Oxford Economics expects U.S. gross domestic product - the value of all goods and services produced in the economy - to grow at a fairly constant rate of around 2 percent from 2017, reaching $18.5 trillion in 2021.
Oxford Economics said its baseline scenario assumes Trump's Democratic opponent Hillary Clinton triumphs in the Nov. 8 vote and a split Congress emerges - between a Republican U.S. House of Representatives and a Democratic U.S. Senate - which results largely in a continuation of current policies.
If Trump is successful in implementing his policies, it predicts growth would slow significantly, falling near zero in 2019, and reducing overall GDP to $17.5 trillion.
Trump would face challenges winning the backing of Congress for all his policies, and some economists argue that looser tax policy could actually help boost economic growth.
The latest opinion polls show Clinton, the former secretary of state, ahead, but her lead has slipped in recent weeks.
(Reporting by John Geddie; Editing by Jamie McGeever and Howard Goller)