Foreign Policy Live Trump’s Tariff Wars
Jan 31, 2025
In this engaging discussion, trade expert Brad Setzer, a senior fellow at the Council on Foreign Relations, reveals his skepticism regarding the Trump administration's aggressive tariff strategies. He argues that imposing a 25% tariff on Mexico and Canada could have severe economic repercussions. Setser contrasts these actions with past trade practices, delving into their impact on consumer prices and cross-border supply chains. The conversation also navigates the complexities of global trade dynamics and the potential shifts in U.S. influence.
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Trump's Tariff Philosophy
- Trump's affinity for tariffs distinguishes him from recent presidents.
- He views them as leverage and potential revenue, unlike others who see them as costly.
Tariff Impact on Inflation
- Tariffs cause a one-off rise in living costs, not sustained inflation.
- Consumers perceive this cost increase as inflation, even if the Fed doesn't.
Economic Impact of Tariffs
- A 25% tariff on Mexico and Canada would significantly shock the US economy.
- This would impact key sectors like oil and autos, potentially costing a percentage point of GDP.