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.
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Long-Run vs. Short-Run Tariff Damage
- The long-run economic damage from tariffs could exceed that of Brexit.
- Short-term damage can be worse due to heightened uncertainty.
Nonlinear Tariff Impact
- Tariff damage isn't proportional to the tariff rate.
- It's proportional to the square of the rate, making a 20% tariff four times worse than a 10% one.
Trump's Tariff Mandate
- Trump's protectionist worldview, held for 40 years, fuels his belief in a mandate to implement tariffs.
- The market's hopes for a different outcome seem naive given his conviction.