Donald Trump likes to say he created the strongest U.S. economy in history. But the centerpiece of his plans for a second term โ tariffs on imported goods, especially those from China โ runs the risk of bringing the U.S.โฒ currently robust economy to a screeching halt, and possibly the worldโs, as well.
Despite warnings from even conservative economists, Trump has stood by his proposed 10% tariff as both a moneymaker for the government and a way to show American strength.
โNumber one, itโs great economically for us and it brings our companies back,โ Trump said on CNBC March 11.
โIt also gives us a big political power. Tariffs are tremendously powerful in terms of stopping wars, because they donโt want tariffs,โ he added. โI made other countries sing with the threat of tariffs. And if you donโt have tariffs, we have nothing whatsoever on them.โ
But economists across the political spectrum say Trumpโs tariff plans, particularly with regard to China, the worldโs second largest economy, would have a huge risk of backfiring and could supercharge inflation.
Mark Zandi, chief economist with Moodyโs Analytics, said the U.S. and China combined produce between one-third to almost half of global economic output, and a trade war between them would be devastating.
โThat decoupling of these two economies โ the disengagement, the deglobalization โ would be very tough for the global economy to digest,โ he said. โDepending on how quickly itโs imposed and timing and all kinds of events, that would significantly diminish the global economy.โ
Trumpโs plans include a 10% tariff on almost all imported goods and higher tariffs in cases where another country has put a large tariff on U.S. goods or has devalued its own currency, as China is accused of doing.
In February, he said he was weighing a 60% tariff on Chinese imports specifically.
Zandi, though he served as an advisor to GOP presidential candidate John McCain in 2008, is seen as aโฆ
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