Economists agree: Trump’s ‘tariffs will be very bad for America and for the world’
As Donald Trump threatens to slap steep tariffs on many countries, he is boasting that his taxes on imports will be a boon to the US economy, but most economists strongly disagree – many say Trump’s tariffs will increase inflation, slow economic growth, hurt US workers and result in American consumers footing the bill for his tariffs.
“Virtually all economists think that the impact of the tariffs will be very bad for America and for the world,” said Joseph Stiglitz, an economics professor at Columbia University and a winner of the Nobel prize in economic sciences. “They will almost surely be inflationary.”
On inauguration day, Trump threatened to impose a 25% across-the-board tariff on all imports from Canada and Mexico on 1 February “because”, he said, “they’re allowing vast numbers of people” to “come in, and fentanyl to come in”. Trump also threatened China with a 10% tariff unless its stops fentanyl shipments, while he maintained his longer-term threat of a 60% tariff on Chinese goods.
“It’s inconceivable that other countries won’t retaliate,” said Stiglitz, who was chairman of Bill Clinton’s council of economic advisers. “Even if some of the governments might not want to retaliate, their citizens will demand that you can’t allow yourself to be beaten up. When you make like a gorilla thumping on his chest, are countries just going to say, ‘Are we chopped liver?’ Their politics will demand that they do something.”
The tariffs, tensions and fears of retaliation and a trade war will probably cause many businesses to reduce their planned investments, and that, economists say, will hurt economies worldwide.
Marcus Noland, executive vice-president of the Peterson Institute for International Economics, said: “The impact of imposing these tariffs,” will “have the effect of depressing US economic growth, contributing to a higher rate of inflation, and those effects will be worse if the other countries retaliate in kind”. [Continue reading…]
This may give some solace to Canadians dreading the impact of large across-the-board U.S. tariffs: you’re not alone in your sentiment.
The idea remains deeply unpopular among residents of the country whose new president is threatening to erect the economically harsh trade barriers. Polls by Leger and the Associated Press/NORC in January both found that only 29 per cent of Americans want tariffs on all imports.
That includes not just a significant (though non-majority) chunk of supporters of Donald Trump’s own Republican Party, but also many of its key figures.
Avowed libertarian Senator Rand Paul and more traditional establishment Republican Mitch McConnell don’t always see eye to eye, but both Kentucky senators have warned that Trump’s broad-based tariff idea is a bad one that will cause prices to rise for American consumers.
Big business may cheer on deregulation and much of what Trump pitches, but opposes tariffs, with the U.S. Chamber of Commerce warning last year his 25 per cent rates on all Mexico and Canadian imports would ding the typical family more than $1,000, “with significant harm to U.S. manufacturers, farmers and ranchers.” [Continue reading…]