45: How tariffs will impact the economy, with Anna Wong, Chief US Economist at Bloomberg
Apr 7, 2025
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Anna Wong, Chief U.S. Economist at Bloomberg, brings her extensive experience from the Federal Reserve and the U.S. Treasury to discuss the impact of tariffs on the economy. She highlights the challenges of navigating current U.S. trade policies and the potential for recession and stagflation due to rising tariffs. Wong also reflects on the early pandemic response and its lessons, while addressing the implications of political biases in economic decision-making at the Federal Reserve and the future challenges facing China.
Anna Wong emphasizes that the Trump tariffs could potentially lower GDP by up to 3% while increasing inflation, complicating economic stability.
Wong advocates for structured scenario planning to assess future trade policy impacts, outlining optimistic, pessimistic, and surprising economic outcomes.
Deep dives
Anna Wong's Economic Background
Anna Wong, Chief U.S. Economist at Bloomberg Economics, has a robust background in economic policy, having previously served as a principal economist at the Federal Reserve and as a principal economist for the White House Council of Economic Advisors during Trump's first term. She has an extensive history working with crucial institutions like the U.S. Treasury Department, where she focused on U.S. economic accounts, and the Peterson Institute for International Economics, where she addressed significant issues around global trade imbalances. Wong's experience has equipped her with the analytical skills to assess the impacts of trade policies, particularly regarding the Trump tariffs, which she was involved in during her time at the CEA. Her unique perspective stems from observing the repercussions of these tariffs in the broader context of domestic and international economic stability.
Impact of Tariffs on U.S. Economy
The discussion emphasizes the significant implications of the Trump tariffs on the U.S. economy, which some models predict could lower GDP by up to 3% while contributing to increased inflation. Wong outlines the Trump's administration perspective, proposing that the tariffs could enhance domestic manufacturing and generate substantial revenue, potentially raising between $600 billion and $900 billion annually. This revenue could then be used to finance tax cuts, aiming for long-term economic growth despite the immediate challenges posed by a potential recession. However, the adverse effects include the risk of inflation rises and increased costs for consumers and businesses, complicating the economic landscape further.
Scenarios for Future Economic Outcomes
Wong proposes a structured scenario planning exercise to evaluate future outcomes regarding U.S. trade policies, which includes a good case, a bad case, and a surprise scenario. In the optimistic scenario, the administration successfully negotiates lower tariffs while fostering foreign investment in U.S. manufacturing, promoting economic resilience and growth. Conversely, the bad scenario envisions a potential recession marked by elevated tariffs leading to stagflation, characterized by stifled growth alongside rising inflation. The surprise scenario raises concerns about exacerbating geopolitical tensions, potentially leading to a military conflict that could severely disrupt global supply chains and hinder economic progress.
Current Economic Challenges and Considerations
Wong identifies several pressing economic challenges tied to the administration's trade policies, including higher inflation rates and an unstable employment environment. There is apprehension that the Fed's interest rate decisions may not adequately address economic downturns, potentially leading to a lack of policy intervention that could worsen the recession. Wong highlights the complexities of managing inflation expectations, especially if the Fed mistakenly interprets economic signals and raises rates unnecessarily. The impending fiscal landscape is projected to bring additional obstacles, potentially increasing national debt repayment costs and impacting consumer spending amid fluctuating market conditions.
Anna Wong is the Chief US Economist at Bloomberg and previously worked at the Federal Reserve, White House Council of Economic Advisors, and US Treasury Department. I can imagine few people in the world better suited to analyze and forecast the impact of the tariffs.
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For a deeper dive into these insights and more, be sure to listen to the full episode of the Onward podcast.
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Onward is hosted by Ben Miller, co-founder and CEO of Fundrise. Podcast production by The Podcast Consultant. Music by Seaplane Armada.
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