Macro Musings with David Beckworth Scott Lincicome on the Trump Trade War
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Mar 31, 2025 Scott Lincicome, Vice President of General Economics and Trade at Cato, dives into the complexities of Trump’s trade war. He discusses the historical evolution of U.S. trade policy, highlighting a shift toward protectionism and geopolitics. Lincicome debunks myths surrounding trade deficits, emphasizing the importance of global supply chains. He also examines the interplay between tariffs and consumer prices, and the crucial role of innovation in manufacturing. The conversation sheds light on the future of globalization amidst changing political landscapes.
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Trade War Uncertainty
- Trump's trade policies have increased economic uncertainty.
- This uncertainty discourages investment and may lead to job losses and higher consumer prices.
Shifting Rhetoric
- Trump's trade war rhetoric has shifted from claiming tariffs are costless to acknowledging a potential "transition period."
- This period implies lower growth, less economic dynamism, and a smaller manufacturing sector.
Globalization's Resilience
- Despite current setbacks, the long-term trend likely favors increased globalization.
- American demand for imports remains strong, suggesting a return to more open trade.
