Latest news with #ColinGrabow
The Herald Scotland
21-04-2025
- Business
- The Herald Scotland
Will the Trump tariff wars end by 2028? We asked economists.
Trump has enacted a flurry of tariffs in the early days of his administration. Tax rates now range from zero (on certain exempted products, such as duty-free items from Canada and Mexico) to more than 100% (on many imports from China, among other trade targets). Tariff policy seems to shift almost daily. It's tough to predict where the rates will sit in a week, let alone in three years, at the end of Trump's term. But it's a question worth asking. Consumers want to plan future car and iPhone buys. Retailers want to predict where prices are headed on clothing and computers. Manufacturers want to divine where to build their next factory. We asked four economists and academicians to predict what Trump's tariff policy may look like in 2028, and what factors might shape it. Here's what they told us. These are their comments in full, edited for clarity. Colin Grabow, associate director, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute No crystal ball is needed to see that tariffs will almost certainly be higher in 2028 than when President Trump took office in January - the only question is by how much. Another outcome would be deeply surprising. For America, the tariff man cometh. Between his first term and the early days of his second, Trump has managed to bury the United States under an avalanche of tariffs. The onslaught has been so extensive that the United States now has its highest average tariff rate in over a century - and more seem on the way. Digging the United States out of this mess will take some doing. Unfortunately, few seem eager to grab shovels. Congressional Republicans are highly reluctant to cross a leader who remains incredibly popular within the party, while Democrats have traditionally been more supportive of protectionist policies favored by organized labor. Assembling a veto-proof coalition to restore sanity to US tariff policy is a tall order. Absent such an intervention, President Trump's de facto tariff switch is likely to remain in the 'on' position. Although some relief could be found in 'deals' with certain countries, or as part of a market-calming exercise, a complete unwinding is deeply improbable. Josh Bivens, chief economist, Economic Policy Institute In 2028, average tariffs could be 5% - about double their level when Trump took office. Or they could be 25%, or even higher than that. The fact that nobody can say with any certainty where tariff rates will be is absolute poison for every business and family in America trying to make plans for their future. Should you build a new factory? Buy a new home? Take out loans for your kids' college? Choose a different industry to work in? All these crucial decisions depend on the state of America's interconnectedness with the rest of the world. Until this is clarified - and truly clarified, not subject to the ever-changing whims of one man - all Americans will be held in limbo, and this will crush economic growth. Most economic policies create winners and losers. The Trump tariff policy is almost entirely creating losers, unless some insiders are timing their stock market purchases around advanced knowledge about new announcements and pauses. What was once unthinkably dumb and corrupt now seems entirely possible. Bernard Yaros, lead U.S. economist, Oxford Economics It's difficult, if not impossible, to know where tariffs will end up in 2028. However, a safe bet would be to assume that the significantly higher tariffs on China will remain in effect, as decoupling from the world's second-largest economy seems to be one of the administration's clearest goals amid the chaotic rollout of reciprocal tariffs this month. Sector-specific tariffs on steel, aluminum, motor vehicle and motor vehicle parts, and others will likely stick as well. Yet, it's probable that the across-the-board reciprocal tariffs on all countries other than China and all products outside certain sectors will either get significantly watered down or go away by 2028. The administration could water down these reciprocal tariffs via further exemptions, targeted toward consumer goods, in a bid to mitigate the inflationary impact. On the other side of the 2026 midterms, you could craft a scenario in which enough lawmakers on both sides of the aisle turn against the reciprocal tariffs and a supermajority in both chambers of Congress overrides a presidential veto to vote down the reciprocal tariffs. Robert Gulotty, associate professor of political science, University of Chicago In 2028, the Trump administration will be in campaign mode and may be trying to take actions that limit blowback from tariffs. In the previous Trump administration, this meant using ad hoc authorities to allocate billions of dollars of cash to farm communities affected by Chinese retaliation. My research with Anton Strezhnev suggests that those efforts moved voters in the 2020 election, particularly in rural communities. They will likely try again. We also saw reversals on the tariffs themselves, as exemptions on steel and aluminum were granted to Canada and Mexico in advance of the approval of a renegotiated NAFTA. However, I worry new cash disbursements and targeted tariff exemptions will have little effect on the overall state of trade policy for the U.S. Unless things dramatically change by 2028, the world will have gone through four years of dramatic and unpredictable policy swings. Measures of formal trade restrictions, like the average tariff, mean little for firms that cannot guess whether their customers will face a tax or not. There may be an appetite for some kind of global deal to reduce this uncertainty, but who would bother negotiating a treaty with a government that is unconstrained by scraps of paper?"
USA Today
31-03-2025
- Business
- USA Today
Brace for impact, America. Trump's tariffs will soon hit your bank accounts.
Colin Grabow Opinion contributor The U.S. economy is staring down the barrel of a tax increase to the tune of several hundred billion dollars. If the Trump administration follows through with its threats (never a sure thing), we will this week see the imposition of so-called reciprocal tariffs to ostensibly match the burden placed by other countries on U.S. exports. As President Donald Trump and administration officials tell it, the move is rooted in a desire to stop foreign countries from ripping Americans off through unfair trade. But such claims warrant considerable skepticism. The administration's words and actions make it increasingly clear that this reciprocity talk is just a fig leaf for higher tariffs. They aren't a means to an end but the end themselves. And unless Congress acts − an unlikely proposition − American businesses and consumers alike will suffer. On its face, the pursuit of tariff reciprocity may seem a commonsense approach. Although not exactly the golden rule, it seems darn close. Why not give U.S. trading partners a taste of their own medicine? But the seductive logic of reciprocity falls apart upon even cursory examination. Need a break? Play the USA TODAY Daily Crossword Puzzle. Tariffs are a tax on American consumers Tariffs are a costly and inefficient tax usually borne by the importing country's consumers. Why should the United States follow suit if other countries are so foolish as to increase those taxes? Furthermore, there's no guarantee such a high-pressure approach will prompt U.S. trading partners to change their policies (and history argues the opposite). What has been accomplished if the United States inflicts economic damage to itself while foreigners stand pat (or, as is often the case, retaliate)? Instead of following foreigners' whims, Americans should set their trade policies based on what makes sense for the United States. That's a real 'America First' policy. Unfortunately, Trump believes, against the overwhelming sentiment of economists, that higher tariffs are good for the economy. As details filter out about the administration's April tariff plans, it's increasingly apparent that the reciprocity talk is a ploy to quickly raise taxes on imports. First, the issues that allegedly merit higher U.S. tariffs change almost daily. So far, the list includes topics as varied as foreign tariff and nontariff barriers, domestic tax policy, currency manipulation, wage levels and 'labor suppression.' No doubt, fresh justifications await. Practical considerations further expose the sham. Given the complexity of the task and the government's limited staff, examining each U.S. trading partner's policies and their trade effects and calculating an equivalent U.S. tariff in a matter of weeks simply isn't possible. For example, a U.S. government investigation launched last year into alleged unfair Chinese trade practices in the maritime industry took months to complete (and even then, delivered a flawed final product). Performing a similar evaluation for every industry, policy and country (even just some) would take years, not weeks − if it were possible at all. Whatever reciprocal tariffs the Trump administration announces this week will be shoddy guesstimates detached from economic reality, not the rigorous analysis that such matters deserve. Equally important, the Trump administration has provided no indication that it intends to assess the United States' own nontariff barriers and then reduce U.S. tariff and nontariff barriers where they exceed those of its trading partners. It's certainly not for a lack of such disparities. U.S. duties of 25% on imported light trucks compare with rates of 10% in the European Union and zero in Japan. Similarly, the Jones Act, which prohibits foreign shipping and foreign-built vessels in domestic commerce, is considered the world's most restrictive maritime cabotage law. The United States also doles out billions in agriculture, semiconductor and renewable energy subsidies and applies high regulatory barriers on imported food and medical goods. If the Trump administration is committed to reciprocity, these trade barriers would be nixed for trade with low-barrier countries like New Zealand. There is little chance they will be. Trump is wrong about economic benefits of tariffs The reason is that reciprocity talk is window dressing for run-of-the-mill protectionism. And really, what else should we expect? Trump is, after all, a self-described 'tariff man' who believes tariffs will make the United States 'so rich we're not going to know where to spend that money.' His close trade adviser, Peter Navarro, has repeatedly said (wrongly) that tariffs reduce trade deficits and boost economic growth. And many Republicans see tariffs as a means to pay for extending Trump's tax cuts. So why would these tariff aficionados seek reciprocal arrangements in which the United States and its trading partners lower their import duties? Let's acknowledge the obvious: Trump is a committed protectionist. He doesn't believe that tariffs are a necessary evil, or any kind of evil, but a path to a more prosperous future and fuller federal coffers. Hence, the flimsy, contradictory, and risible justifications for tariffs on some of America's strongest partners and most reliable allies. Reciprocity is just the latest excuse for the higher import taxes that Trump has long desired and − abetted by congressional fecklessness − will likely soon get. Americans may have voted for lower prices in November, but under the guise of tariff reciprocity, the Trump administration is set to deliver something very different. Colin Grabow is an associate director at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies.
Bloomberg
20-03-2025
- Politics
- Bloomberg
Odd Lots: The Great Jones Act Debate
We finally did it. We finally did an episode on the Jones Act. For years on the podcast, we've been referencing this controversial law from 1920, which places restrictions on domestic port-to-port transport in the United States. But we had never actually done an episode on what it is, why it was created, and why people feel so fervently about either keeping or maintaining it. There are plenty of people who feel that this law is an inhibitor of US growth, because domestic water-based shipment of goods requires a US-flagged, US-crewed, and US-built vessel. And yet the law persists -- for over a century now. At our live show in Washington DC, we spoked with the Cato Institute's Colin Grabow (who took the anti side) and the Transportation Institute's Sara Fuentes (who took the pro side). They explained their respective positions on questions of the economics and national security in a lively, heated (but polite) debate.
Bloomberg
20-03-2025
- Politics
- Bloomberg
The Great Jones Act Debate
Listen to Odd Lots on Apple Podcasts Listen to Odd Lots on Spotify Subscribe to the newsletter We finally did it. We finally did an episode on the Jones Act. For years on the podcast, we've been referencing this controversial law from 1920, which places restrictions on domestic port-to-port transport in the United States. But we had never actually done an episode on what it is, why it was created, and why people feel so fervently about either keeping or maintaining it. There are plenty of people who feel that this law is an inhibitor of US growth, because domestic water-based shipment of goods requires a US-flagged, US-crewed, and US-built vessel. And yet the law persists -- for over a century now. At our live show in Washington DC, we spoked with the Cato Institute's Colin Grabow (who took the anti side) and the Transportation Institute's Sara Fuentes (who took the pro side). They explained their respective positions on questions of the economics and national security in a lively, heated (but polite) debate.
