Global ripple effects: Expert insights on Trump’s tariff plans

EXPERT ANALYSIS

Former President Donald Trump has reiterated his commitment to imposing tariffs on companies that manufacture goods outside of the United States. This move, intended to bolster domestic production and protect American jobs, has significant implications for international trade dynamics and economic relationships.

Alan Deardorff, the John W. Sweetland Professor Emeritus of International Economics and Professor Emeritus of Public Policy, offers his expert analysis on the potential impact of these proposed tariffs. His insights will help illuminate how such policies may influence the economies of major trading partners like China and Mexico, as well as the broader U.S. economic landscape.

People will see changes in consumer prices, as these tariffs could affect everyday life, including employment patterns and the cost of goods.

What effects do you anticipate from Trump's proposed tariffs on imports, and how might countries retaliate?

The effects of Trump's stated tariff plans depend a great deal on exactly the products that he puts tariffs on, the countries whose exports he applies them to, and crucially the extent to which those countries retaliate with tariffs on U.S. exports. Assuming that he follows through with his proposal to apply a 10% (or 20%) tariff on all imports from all countries, and that many of those countries retaliate (as they did when he used tariffs in 2018), the effect will be to largely cut the U.S. off from the world trading system, substantially reducing both our imports and our exports.

How could a 10% or 20% tariff on imports impact the U.S. economy, including costs and industry effects?

This will raise the costs of much that we currently import from abroad, as well as the even more things that rely on imports as inputs to their production. Our export sectors will shrink. Overall, we can expect permanently higher prices and a recession.

What might be the global economic consequences of Trump's tariff plans, particularly for countries reliant on U.S. trade?

As for the rest of the world, those countries that depend heavily on trade with the U.S., most obviously Canada and Mexico, will be badly hurt, and the world too will likely go into recession. But I expect that most of the world will recover from that before we do because, big as we are, the rest of the world is much bigger.