Capital Ideas Podcast Are tariffs a threat to the U.S. economy?
11 snips
Mar 20, 2025 In this discussion, Jared Franz, a Capital Group economist, teams up with investment director David Polak to dissect the implications of rising tariffs on the U.S. economy. They explore how protectionist policies could create uncertainty, potentially upending a healthy market. The conversation also dives into tariffs as strategic tools in U.S.-China relations and their impact on global trade dynamics. Franz reveals the ripple effects on various sectors and highlights the evolving role of foreign investment in shaping economic policy and job growth.
AI Snips
Chapters
Transcript
Episode notes
Unusual Economic Cycle
- The U.S. economy is experiencing a "Benjamin Button" cycle, moving from late-cycle back to mid-cycle.
- Mid-cycle periods historically offer favorable investment opportunities with potential returns of 10-15%.
Tariff Impact on US Economy
- Tariffs raise prices on imported goods, impacting the U.S. economy, which has relatively low export exposure.
- The price increase passed to consumers is typically 30-50% of the tariff, not the full amount.
Targeted Tariffs
- Despite headlines, not all goods are being tariffed. Initial tariffs targeted goods from Canada, Mexico, and China, affecting about 40-50% of U.S. imports.
- Future tariffs may exclude consumer goods to protect consumers from inflation, potentially focusing on businesses.