From Reuters:
In an interview with NBC’s Meet the Press that aired on Sunday, Trump said he did not believe that consumers ultimately pay the price of tariffs, adding “I think they’re beautiful.”
A retrospective:
Forty years ago, I was working for Bob Crandall as an RA at Brookings, on how much the voluntary export restraints (VERs) added to the costs of a typical Japanese imported car. He found that number to be about $820 (a Datsun Stanza was about $6700 in 1981), and a comparable domestically produced car by about $370 (since the VER puts up a wall that allows domestic producers to raise prices). Today, according to Wells Fargo, the 25% tariffs would result in a vehicle assembled in Mexico or Canada to go up in price by $8000-$10000, while the average over all cars using imported parts will go up about $2100 (average car price in March 2024 is about $47000; a Ford F150 STX is about $42000).
President-elect Trump has mentioned a 25% tariff on Mexico and Canada. Time to think about how this would affect Wisconsin, a state that voted for Mr. Trump.
What else would one expect from expectations of expanded budget deficits, higher incipient inflation in the context of a Taylor rule reaction function, when the currency is a safe haven asset?
Former Senator Toomey (Politico):
“We have a recession coming. That’s what the response would be from a full-blown trade war that [Trump] would precipitate,” Toomey said, referring to the president-elect’s trade proposals. Those include tariffs of up to 20 percent on all imports, tariffs of at least 60 percent on China and more radical positions such as swapping the income tax with tariffs.
Answers: No. No. No.
From the National Corn Growers Association:
U.S. soybeans and corn are prime targets for tariffs. As the top two export commodities for our country, together they account for about one-fourth of total U.S. agricultural export value. As such, a repeated tariff-based approach to addressing trade with China places a target on both U.S. soybeans and corn. Farmers and rural economies pay the price as a result.
By Menzie Chinn and Mark Copelovitch
A Harris administration is far less likely to disrupt the ongoing and unprecedented American economic recovery of the last three years with stark policy reversals. This is an expanded version of an op-ed published in the Milwaukee Journal Sentinel.
