The United States is poised to implement significant tariffs on Canada, Mexico, and other nations beginning March 4, alarming economists who warn of potential economic repercussions. These tariffs, introduced under President Trump’s directive, include 25% levies on Canadian and Mexican imports, an additional 10% on Chinese products, and 25% on steel and aluminium. The uncertainty surrounding these abrupt announcements raises fears of inflation and diminished consumer and business spending, leading to a risk of stagflation.
Experts at the Peterson Institute for International Economics express that the chaotic nature of the tariff announcements exacerbates uncertainty, potentially curtailing investments and spending. Marcus Noland stated, “What gives me pause about that now is the unsettling way that the administration is going about its business and general confusion about tariffs.”
Gregory Daco from EY-Parthenon cautioned that the tariffs might trigger a recession if elevated to extreme levels. He noted that the additional costs from these tariffs would mostly be transferred to consumers, which could significantly impact spending patterns. “In a world where your imports cost 25% more, there is going to be a notable impact on prices and inflation,” he warned.
The growing fears of a trade war have already influenced U.S. consumer confidence, which saw its largest monthly decline in over four years. Daco highlighted that the policies might create an inflationary environment, risking stagnation reminiscent of the troubling 1970s economic times. Furthermore, U.S. consumer spending fell for the first time in nearly two years, indicating the adverse effects of tariff threats on household sentiments.
Economists also point out that the Trump administration’s push to reduce the size of government and cut jobs might further dampen economic activity. Ryan Sweet stated that the loss of federal jobs could impact local economies as federal workers contribute significantly to various sectors, from hospitality to services, implying possible negative repercussions for businesses reliant on this consumer spending.
The U.S. is about to impose new tariffs on Canada, Mexico, and other countries, raising alarms among economists over potential inflation and economic stagnation. The abrupt tariff announcements have caused uncertainty, leading to decreased consumer confidence and spending. Furthermore, the government’s budget cuts may negatively impact the economy by reducing local spending.
In summary, the imminent implementation of new tariffs in the U.S. has sparked significant concern among economists. The potential for increased inflation, coupled with the dampened confidence of consumers and businesses, could signal troubling economic trends ahead. The situation is complicated further by the government’s budget cuts, which threaten to limit local spending, leading to potential stagnation.
Original Source: www.cbsnews.com
