Bloomberg Talks Paul Krugman, Economist/Professor at CUNY Graduate Center Talks Tariffs And The Markets
Apr 8, 2025
Paul Krugman, a renowned economist and NY Times columnist, dives into the tangled web of tariffs and trade wars. He explains how current U.S. tariff policies echo past economic mistakes like the Smoot-Hawley Act. Krugman discusses the urgent need for clear trade policies in a shifting global landscape, emphasizing the impact on unemployment and recession risks. He also advocates for Congress to reclaim its authority over trade, pushing back against presidential dominance and highlighting the possible bipartisan support for reform.
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Current Trade Situation
- The US economy is currently facing a very bad situation regarding trade.
- Trump's tariff plan is significantly higher than Smoot-Hawley and starts from a low point, impacting the US economy, which is now three times as open to international trade as it was in 1930.
International Reaction to Tariffs
- Nations are reacting to Trump's trade policies, with China refusing to negotiate.
- Europe has little room to make concessions as their tariffs on US goods are already low, around 1.7%.
Trump's Tariff Policy Goal
- The Trump administration's tariff policy aims to reorder the world economic order.
- However, the US trade deficit is mainly due to attracting foreign capital, and the idea of bilateral balanced trade is flawed.