In a bold move, US President Donald Trump has unveiled the “Liberation Day” tariffs, which impose a baseline 10% tariff on almost all imports, with significantly elevated rates for certain nations like India, facing a steep 27% tariff. This sweeping measure has ignited fervent discussions among economists, igniting fears regarding potential economic fallout. Renowned French economist Olivier Blanchard has voiced his concerns, indicating that these tariffs may result in a recession, stating they would lead to “a recession, no gain. A general mess.”
Former U.S. Treasury Secretary Lawrence H. Summers condemned the move for its role in triggering a stock market downturn, highlighting its immediate economic repercussions. In a lighter vein, Dean Baker, an American economist, compared Trump’s rationale for tariffs to a physician basing a patient’s health advice on their height-to-birthday ratio, emphasising the flawed logic behind such decisions.
Argentine economist Iván Werning spotlighted the alarming statistic that Trump’s new tariffs would raise the U.S. weighted average tariff to levels surpassing those of the Smoot-Hawley Tariff Act, which had catastrophic impacts during the Great Depression, reducing trade volume drastically. He expressed hope that these tariffs wouldn’t be fully implemented. Furthermore, Michael Pettis, finance professor at Peking University, critiqued the effectiveness of these tariffs in solving trade imbalances, suggesting they might deepen existing challenges.
The “Liberation Day” tariffs have sparked extensive debate, with economists articulating worries about potential disruptions to global trade, heightened consumer prices, and overall economic instability. As discussions unfold, the imperative for strategic dialogue and thorough evaluation becomes evident as the world braces for the impact of these drastic measures.
President Trump’s “Liberation Day” tariffs, imposing a 10% baseline on imports and higher rates for specific countries, have stirred considerable debate among economists. Many, including Olivier Blanchard and Lawrence Summers, express grave concerns about causing a recession, market meltdowns, and negative impacts similar to the Smoot-Hawley Tariff Act. Calls for strategic dialogue and careful evaluation echo throughout the economics community as the ramifications unfold.
These tariffs have ignited substantial concern among leading economists, with many predicting severe economic downturns and trade disruptions. From Olivier Blanchard’s grim forecast of recession to Iván Werning’s historical comparisons warning against the folly of high tariffs, it is clear that Trump’s measures could have dire implications. The economic community is urging the need for careful assessment and a strategic approach to mitigate potential instability in global trade.
Original Source: www.hindustantimes.com
