Capital Ideas Podcast
Are tariffs a threat to the U.S. economy?
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.
30:09
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Quick takeaways
- The U.S. economy is transitioning to a mid-cycle phase, presenting favorable investing opportunities with expected returns of 10 to 15 percent.
- Tariffs raise consumer prices and affect trade relationships, compelling companies to adapt by enhancing their production capabilities domestically.
Deep dives
Current Economic Landscape
The U.S. economy is evolving from a late cycle to a mid-cycle phase, contrary to the traditional trajectory. Historically, mid-cycle periods offer advantageous investing environments, producing returns ranging from 10 to 15 percent. With cautious optimism, the economy grew at approximately 3% GDP as it approached 2023, suggesting a shift towards healthier conditions. Understanding this foundational shift is crucial for anticipating future trade policy implications.
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