‘Donald Trump’s tariff threats are causing huge trade uncertainty now — ‘beggar-thy-neighbour’ steps benefit none, including the US’
Maurice Obstfeld, former Chief Economist at the International Monetary Fund (IMF), teaches at the University of California, Berkeley. Speaking to Srijana Mitra Das, he discusses burgeoning tariffs — and their effects on prosperity:
Q. What do Donald Trump’s tariffs mean for the US economy?
A. Currently, he’s backed off on the Mexican and Canadian tariffs but he has put additional tariffs on China, which brings the total effective rate on Beijing to around 30% — this means higher prices for imports from China and increased costs for goods produced in the US which use these. That spells lower profitability for such companies and higher prices for their customers.
Budget with ET
Tax calculator
Meanwhile, China’s applied tariffs of its own on coal, liquid natural gas, etc. — this hurts US exporters. They are also forbidding exports to the US of some critical minerals used in manufacturing.
Why would Trump, a populist leader, raise costs for Americans?
Trump denies tariffs raise prices — he says these will restore manufacturing jobs and increase wages. Another theory is that he simply sees these as a bargaining chip to get what he wants from other countries, whether that’s better border enforcement, territory or a buyer for TikTok. There’s quite a range of things he seems to want — and tariffs are apparently his go-to means of coercion.
What does this imply for the dollar?
Economic theory says tariffs strengthen a country’s currency — the more wide-ranging they are, the bigger the effect. We’ve seen this recently
Read more on economictimes.indiatimes.com
