Trump's tariff plans stir debate on global trade future
Trump backs tariffs‚ economists warn of risks. Global trade shifts as protectionism grows. China claims role as globalization champion. US voters favor higher import duties despite potential economic impacts
Donald Trump recently spoke in Chicago‚ declaring tariffs as his favorite word. He plans to hike duties on Chinese goods to 50-60% and put 10-20% levy on all imports if re-elected (this was about 9 months ago)
Trumps view is that this approach will fix the global economy which he thinks is against the US. He believes itʼll make businesses move their factories to America. This idea takes us back to the late 1800s when tariffs were high but not very good.
However‚ many people dont agree with Trump. Treasury Secretary Janet Yellen said (without naming Trump) that putting up walls with high tariffs on friends and rivals is not smart. She thinks itʼll make things more expensive for Americans and hurt US businesses.
Sixteen Nobel-prize winning economists wrote a letter 4 months ago warning about Trumps ideas. They said:
Many Americans are concerned about inflation‚ which has come down remarkably fast. There is rightly a worry that Donald Trump will reignite this inflation‚ with his fiscally irresponsible budgets
Joseph Stiglitz‚ one of these economists wrote that higher tariffs on Chinese goods would really hurt poorer Americans. A 20% tariff on all imports could mean a $4 trillion tax increase over 10 years.
But Trump isnt alone in his thinking. Most US voters like the idea of higher tariffs on foreign goods. The Biden administration has kept many of Trumps tariffs. Even in Europe‚ former Italian PM Mario Draghi suggested tariffs on some clean-tech imports to help fight Chinas advantage.
The world is changing – trade is being redirected based on politics. Gita Gopinath from the IMF said earlier this year that there are “increasing signs of fragmentation“.
If Trump does what he says‚ it could really shake things up. Douglas A. Irwin‚ an economist‚ thinks it would be very disruptive because world economies are so connected now.
Interestingly‚ China is now saying its the champion of globalization that Western leaders arent defending. A meeting in Pakistan of the Chinese-led Shanghai Cooperation Organization criticized Western tariffs on Chinese goods
