Economist Şebnem Kalemli-Özcan from Brown University presents a stark contrast to the pro-tariff stance of the current presidential administration. She describes tariffs, often perceived as advantageous, as detrimental to the economy and warns that, despite tariffs being likened to a tax on imports, it is consumers who ultimately bear the financial burden. The economist contends that if tariffs on goods from Mexico, Canada, and China are implemented, they will harm American consumers and businesses alike, resulting in increased prices.
Kalemli-Özcan provides a clear definition of tariffs as taxes on goods rather than individuals, levied primarily on imports. When tariffs are imposed, the importing companies bear the cost initially, but this cost is typically passed onto consumers, leading to higher prices. “Economists do agree on one thing: tariffs are costly to the American consumer in the end,” she states, reinforcing her belief that consumers are left to shoulder the financial implications of these tariffs.
While tariffs may be intended to bolster American-made goods, Kalemli-Özcan argues that this approach is flawed without supportive industrial policies. Simply increasing the price of foreign goods does not guarantee that domestic alternatives will be competitively priced or of equal quality. Moreover, she notes that the expected revenue from tariffs would likely be insufficient for effective subsidies, indicating a pathway to inflation and potential recession rather than an economic boost.
The potential implementation of significant tariffs, such as 25%, on imports from Canada and Mexico raises alarms regarding their impact on the integrated trade relationships between these countries and the US. Such measures could lead to decreased consumer spending and possibly job losses, as accessibility to imported goods diminishes and prices rise across virtually all sectors.
As for the proposed 10% tariff on Chinese imports, Kalemli-Özcan believes the administration has carefully reconsidered their initial proposal of 60%. Although a 10% increase might not wreak havoc on the economy, it still represents a potential hike in prices that the average consumer will felt. The broader context shows a troubling trend towards utilising tariffs not solely for economic reasons, but also as political tools.
In an environment where tariffs are resurgent, like during the Smoot-Hawley Tariff Act era, it is essential to understand the risks they carry. The past taught lessons regarding the potential for tariffs to backfire, and current approaches seem to echo these historical missteps. Kalemli-Özcan poignantly adds that consumers may find they have little choice but to cope with rising prices, seek alternatives, or curtail spending, further threatening the economic stability.
Economist Şebnem Kalemli-Özcan critiques the administration’s tariff plans, arguing they will ultimately hurt American consumers and businesses. Tariffs act as taxes imposed on imports, which consumers will ultimately pay. Without accompanying industrial policies, the tariffs are likely to lead to inflation and economic downturns rather than bolster the domestic market. Kalemli-Özcan cautions about the significant potential impacts of these tariffs, especially concerning trade relations with Mexico and Canada.
The insights of Professor Şebnem Kalemli-Özcan echo a strong warning against the administration’s intended tariffs. Highlighting the overarching impact on consumers, the potential for inflation, and the likelihood of decreased spending, she paints a grim picture of an economy influenced by tariff policies. Without proper industrial support, the anticipated benefits of domestic manufacturing could remain untapped, while jobs and prices may suffer.
Original Source: www.futurity.org
