Jeffrey Frankel, a professor at Harvard, discusses the global implications of Donald Trump’s economic policies with Srijana Mitra Das. He warns that Trump’s tariffs could spark a major recession, suggesting heightened trade tensions might manifest in noticeable ways for everyday Americans, including increased prices and possible stagflation.
Frankel notes that the probability of a US recession is alarmingly higher than usual—approximately 50% compared to the normal 15%. Tariffs on steel from Canada, for example, could severely impact the US auto industry, leading to political ramifications that Trump may exploit for support from his base, regardless of the economic fallout.
The uncertainty surrounding business investments in the US is intensifying. Frankel argues that any manufacturer looking to invest needs clarity on tariff regulations, but the prevailing chaos causes hesitation and plummeting investment levels.
The health of the dollar is also under examination, with initial growth following Trump’s election being attributed to expectations of budget deficits and higher interest rates. However, erratic policies may now be sowing fear among investors, as evidenced by stock market declines. Trump’s conflicting desires to both devalue the dollar and assert its international dominance create a paradox for his administration.
Looking ahead, Frankel believes that Trump’s actions are irreversibly altering the landscape of globalisation. As the post-war order diminishes under his leadership, countries may seek to lessen their dependence on the US, which could be detrimental to global interests, even amidst grievances against US foreign policy.
While Trump initially enjoyed backing from business communities due to promised deregulation, many have reconsidered as the economic effects unfold. The core support from his voter base stems largely from a perception of strength, rather than an understanding of the economic complexities involved.
Finally, Frankel views this unfolding drama as a tragedy rooted in foreseen consequences. The financial stakes are monumental, painting a concerning picture for the future of both the US economy and international relations.
Jeffrey Frankel, a Harvard professor, discusses the global impacts of Donald Trump’s economic strategies, warning of a heightened risk of recession and adverse effects from tariffs. He addresses the uncertainty affecting investments in the US, the complex fate of the dollar, and the ongoing changes in globalisation. Frankel characterises the unfolding situation as a tragic outcome with potentially severe consequences.
In conclusion, Jeffrey Frankel highlights the potentially dire global repercussions of Donald Trump’s economic strategies, particularly the risk of recession, the uncertainty in capital formation, and the challenges to the dollar’s dominance. His analysis suggests that the consequences of these policies could lead to a significant shift in globalisation and economic dynamics, raising concerns for the future.
Original Source: m.economictimes.com
