In a recent segment on CBS, Jill Schlesinger discussed the economic repercussions of tariffs, specifically in the auto sector. Her guest, Professor Ed Burton from UVA, voiced a strong dislike for tariffs despite his political leanings. Schlesinger highlighted that tariffs act as a “blunt instrument” leading to immediate price hikes, exerting pressure on consumers and the economy.
The effects of tariffs on U.S. auto manufacturing were a focal point, with Schlesinger revealing that nearly 50% of vehicles sold in the U.S. are imported, alongside 60% of parts. Transitioning quickly to domestic production, she noted, is not feasible. In her words, “You could see prices go up by say 3 grand, maybe 10 grand, 15,000 if you’re one of these fancy folks who drives an imported BMW or Audi.” This significant price increase could cause consumers to reduce spending, which may hinder economic growth.
Schlesinger expressed broader concerns about tariffs potentially leading to stagflation, characterised by stagnant economic growth with rising prices. She observed that “Consumer sentiment and confidence surveys have really turned pretty sour,” affecting everyone regardless of income or political stance. While she doesn’t predict an immediate recession, the inflationary pressures could thwart any near-term interest rate cuts by the Federal Reserve, pushing inflation beyond their target.
Jill Schlesinger discussed the negative implications of tariffs on the U.S. auto industry, highlighting that tariffs inflate prices and potentially slow economic growth. Professor Ed Burton shared his disapproval of tariffs, noting that consumer confidence has diminished. While a recession isn’t near, inflation pressures loom large, complicating interest rate strategies for the Federal Reserve.
In summary, tariffs pose a threat to the U.S. economy, particularly within the automotive sector, by leading to price increases and potentially stalling economic growth. Economic experts caution that while a recession isn’t currently on the horizon, heightened prices may sustain inflation at levels that prevent any cuts in interest rates. Consumer confidence has also seen a notable decline, affecting individuals across the board.
Original Source: cvillerightnow.com
