Bloomberg Surveillance
Single Best Idea with Tom Keene: Dr. Paul Krugman & Libby Cantrill
Apr 8, 2025
Dive into the impact of economic tariffs and their political implications. Discover how current policies are shaped by the past, particularly under Trump’s influence. Explore the potential rise in tariffs and what it means for inflation and growth. The conversation sheds light on the murky waters of trade policy and tax discussions as uncertainties loom.
05:40
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Quick takeaways
- High tariffs can have extreme nonlinear effects on the economy, potentially inflicting significantly greater damage than previously understood.
- The current political landscape, especially among Republicans, suggests a persistence of high tariffs, contributing to challenges in economic growth and inflation.
Deep dives
Impact of Tariffs on the Economy
High tariffs can have a disproportionately negative effect on the economy, as explained by an expert in the field. Specifically, the damage inflicted by tariffs is not linear; for instance, a 20 percent tariff can be four times more damaging than a 10 percent tariff due to the compounding nature of the economic impact. Additionally, it is suggested that the long-term consequences of these tariffs could surpass the economic fallout from Brexit, with estimates predicting a potential loss of more than three to four percent of GDP in affected regions. The uncertainty introduced by these tariffs can create immediate adverse effects that outweigh the adjustments businesses may eventually make.
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