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Monetary Matters with Jack Farley
Tariffs & Q2 Growth Shock | Trade Maven Brad Setser on Trump’s Tariff Warpath, China’s Balance of Payments, and “Self-Induced Recession” Probabilities
Mar 26, 2025
Brad Setser, a senior fellow at the Council on Foreign Relations and former advisor to the U.S. Trade Representative, dives into the potential growth shock from Trump’s tariffs. He unpacks how these tariffs can impact GDP, inflation, and global trade dynamics, echoing concerns of historical precedents. Setser also dissects China’s balance of payments, revealing discrepancies in their reported figures, and discusses the implications of U.S. industrial policies on tech competition with China, highlighting the intertwining of trade and corporate profits.
01:26:25
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Quick takeaways
- The potential growth shock anticipated from Trump's tariffs could significantly impact U.S. GDP and investment decisions in Q2.
- The uncertainties surrounding tariffs may lead to rising import prices, provoking inflation and possibly contributing to a recession.
Deep dives
Uncertainty Surrounding Tariffs and Their Economic Impact
The podcast discusses the uncertainty regarding recent tariffs announced by the Trump administration and their potential repercussions on both the U.S. and global economies. The expected reciprocal tariffs could be substantial, impacting sectors that include automobiles, pharmaceuticals, and semiconductors. Proponents of these tariffs estimate significant costs, with some projections suggesting they could reach around 1% to 2% of U.S. GDP. This ambiguity leads to hesitance in investment decisions, creating potential risks for a recession and altering trade dynamics.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode