Latest news with #DouglasHoltz-Eakin
Yahoo
08-04-2025
- Business
- Yahoo
Elon Musk and Peter Navarro fight as Trump's policies continue to tank stock market
Douglas Holtz-Eakin, Former Congressional Budget Office Director and Charlotte Howard, Executive Editor at The Economist join Nicolle Wallace on Deadline White House with reaction to another day of losses on the stock market and what comes next for the American economy, with tariffs set to kick in at midnight.
Bloomberg
07-04-2025
- Business
- Bloomberg
No Sense of Clarity On Trump Tariffs: Holtz-Eakin
Douglas Holtz-Eakin, American Action Forum President, weighs in on whether or not President Trump's tariffs are permanent or negotiable and how the tariffs will impact the economy based on this. Holtz-Eakin also talks about why he is leaning towards concerns that the US is headed towards a recession. He speaks with Kailey Leinz and Joe Mathieu on the late edition of Bloomberg's 'Balance of Power.' (Source: Bloomberg)
New York Times
05-04-2025
- Business
- New York Times
Republicans Like to Cut Taxes. With Tariffs, Trump Is Raising Them.
The Republican Party embarked this week on a haphazard experiment in economic policymaking, wagering that the United States can weather a monumental tax increase in the form of broad tariffs on imported goods as long as Congress also cuts taxes on income. It's a mash-up that many investors, economists and even some G.O.P. lawmakers expect to be a failure. 'I always think that with gambling, at least you have a chance of winning. This is worse than that,' Douglas Holtz-Eakin, a conservative economist who worked for former President George W. Bush, said. 'This is betting with the mafia. You're going to lose.' President Trump's plan to charge at least a 10 percent tariff on nearly all imports into the United States — along with much higher rates on goods from many countries — is the culmination of his quest to force companies to manufacture domestically, even if it comes at the expense of a relatively strong economy. Because tariffs are a type of taxation, Mr. Trump's plan is among the largest tax increases in decades, analysts say, a policy change that sent the stock market reeling, paralyzed corporate investment and shoved the economy closer to a recession. At the same time, Republicans on Capitol Hill are plowing forward with legislation that would lock in lower taxes for American individuals and companies. There's diminishing hope among Republicans that those cuts can make up for drag created by the tariffs. Some of Mr. Trump's allies and tax cut enthusiasts, like Stephen Moore, his former economic adviser, have been begging the president for 'more tax cuts and less tariffs, please.' Of course, Mr. Trump and the White House argue that tariffs are not taxes on Americans, but rather on foreign companies that will have to lower their prices to maintain access to the U.S. market. Mainstream economists have consistently found that tariffs raise prices for American consumers and companies, including domestic manufacturers who import materials to turn into final products. Want all of The Times? Subscribe.
Boston Globe
03-04-2025
- Business
- Boston Globe
Economists say the way Trump calculated tariffs makes no sense
The math used to come up with those rates is what experts are lampooning. A formula released by the US trade representative ties those punitive taxes to the United States' bilateral trade deficit in goods with each country — in other words, how much more the US imports from those countries than it exports to them. The calculation finds the ratio between the US trade deficit with a country and that country's total exports to the US. It then divides the ratio in half to produce what the administration called a 'discounted reciprocal tariff.' Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Economists criticized the formula for its assumption that persistent trade deficits are a reflection of allegedly unfair trade practices by US trading partners. They point out that the math apparently leaves out services — which make up the bulk of the US economy and an important proportion of its exports — from calculations of trade deficits, which has the effect of making US trade relationships look more one-sided. They also say there's nothing 'reciprocal' about the punitive tax rates because they're disconnected from any actual barriers countries impose on US imports. Advertisement 'They've got an indefensible foundation to an indefensible policy,' said Douglas Holtz-Eakin, president of the conservative American Action Forum. Advertisement The administration says this approach takes into account tariffs as well as so-called nontariff barriers that include regulatory restrictions or currency manipulation. The problem, economists say, is that trade imbalances can be driven by lots of factors that have nothing to do with trade barriers or unfair practices. Bananas and coffee, for instance, can't be grown at scale in the United States and have to be imported. That drives up the US trade deficit with any country that grows a lot of those products. Another example: Though the US has a trade deficit with Canada, it's not because of trade restrictions. That deficit is partly driven by Canadian exports of a heavy grade of oil that US refineries are particularly good at refining. On Thursday morning, Commerce Secretary Howard Lutnick defended the formula, suggesting the White House's Council of Economic Advisers and the US trade representative have large staffs of economists who have studied the issue of tariffs and nontariff barriers for years to come up with the administration's methodology. 'This is a reordering of global trade, and it's really thoughtful,' he said on CNBC. 'If you understood how rough these other countries are on American products … and they have subsidies, and they have trade barriers, and [American companies] can't sell.' 'The rules of the world are so stacked against us,' he added. The formula produces significantly different results based entirely on the size of a country's trade deficit or surplus with the United States, heavily penalizing any nations that have sold more goods here than they have bought. For instance, Vietnam and Cambodia face massive additional tariffs of 46 percent and 49 percent, respectively, because of their large trade deficits with the United States — deficits that sprang up recently in part because companies moved production to those countries when the US government indicated it didn't want them making goods in China. The European Union, with a more modest trade deficit, faces a 20 percent added tax. Advertisement Meanwhile, countries that don't have a trade deficit with the US will pay only the flat 10 percent tax imposed on all goods. Countries the White House included in that club include Britain, Brazil and Singapore. Beyond questioning the administration's methodology, experts on international trade said the punitive taxation of imported goods would not achieve the administration's stated goal of reducing US trade deficits to zero. Maury Obstfeld, a senior fellow at the Peterson Institute for International Economics, said the new system will just reshuffle US trading relationships, like a game of whack-a-mole. Countries hit with particularly high tariffs might reroute their imports through lower-tariff destinations, though importing from those places will still entail a 10 percent tax. He also said consumers could simply shift purchases to similar products from countries hit by lower tariffs. 'All we're doing here is reshuffling our trading relationships in ways that are particularly injurious because they basically penalize trade in the areas where it's of most value to us, and without mitigating the perceived problem that overall the country has a deficit with the rest of the world,' he said. Advertisement Holtz-Eakin said the punitive import taxes are arbitrary — but probably by design. 'Trump probably liked it that way, because then it all comes down to a negotiation' with each country, he said. 'That appeals to him, but it's terrible policy for the global trading system.'
Yahoo
17-03-2025
- Business
- Yahoo
Commentary: Trump's outdated fixation on manufacturing
The stock market is struggling to adapt to President Trump's aggressive tariffs. Economists are downgrading their growth forecasts. Some are predicting a recession. Voters are souring on Trump's handling of the economy, just two months into his second presidential term. With all the churn, it's worth asking: What is this all about, anyway? Why is Trump doing this? Is it worth the trouble? Read more: What Trump's tariffs mean for the economy and your wallet Trump has offered a variety of rationales for the tariffs he has imposed on… well, the latest count is thousands of imported products from dozens of countries. Trump wants trade partners to help stem the flow of migrants and fentanyl into the United States. He wants more federal revenue from tariffs. He wants to punish nations that have put more limits on buying US products than the United States has put on theirs. But there's one overriding Trump aim: to beef up domestic manufacturing and add more blue-collar jobs. 'We'll impose new tariffs so that the products on our stores will once again be stamped with those beautiful words, made in the USA,' Trump said in a January speech previewing his second term. He highlighted more domestic production of cars, lumber, ships, and many other things as hallmarks of his new 'golden age' in America. Manufacturing is important, but it's not where you'd likely start in a clean-sheet effort to turbocharge the US economy. Manufacturing accounts for just 10% of GDP, a portion that has gradually declined since the 1980s. We still build a lot of stuff in America. Industrial output is close to record highs. But manufacturing requires fewer and fewer workers, for obvious reasons. Producers continually adopt automation and manufacturing gets more efficient. It is true that some manufacturing capacity has left the United States for overseas markets, contributing to the loss of blue-collar jobs. But if that work had stayed, the same efficiency forces would have applied and the nation would have continued to make more stuff with fewer workers. This trend is very familiar. Agriculture used to employ a majority of Americans, but the industrialization of the economy in the 1800s and 1900s changed that. The farm economy today accounts for just 1.2% of all jobs. And thanks to massive efficiency gains, those workers provide plenty of food for the US market, as well as for export. Trump's tariff plan is basically an effort to push the US economy back in time, like somebody in the middle of the Industrial Revolution agitating to keep all the workers on farms. 'The problem is that it isn't the 1950s or 1960s anymore,' Douglas Holtz-Eakin, former director of the Congressional Budget Office and head of the American Action Forum think tank, explained in a recent blog post. 'Manufacturing jobs have been declining for generations from a complex set of forces that cannot be offset by a simplistic reliance on tariffs. There are no jobs to 'bring back.'' This is not to pretend that nothing is wrong. The decline in blue-collar employment has, in fact, ravaged some communities once reliant upon it. A prominent group of economists has thoroughly documented the 'China shock' — the migration of US manufacturing jobs to China over a period of some two decades — and the degradation of living standards for millions of blue-collar Americans. The globalization of trade brought advantages, including low prices for many goods and a booming corporate sector that enriched the investor class. But US policymakers never had a good answer for how to take care of displaced blue-collar workers. Trump exploited that failure when he ran for president in 2016 and appealed to the 'forgotten men and women of America.' The pitch worked again in 2024, a time when three years of high inflation had eroded living standards even the strength of the US economy is no longer in manufacturing, no matter what Trump does. It's in services and technology. Most of the jobs in the US economy are in services these days, and that's where almost all of the future growth will come from. Almost anybody looking for a stable career would be better off in a sector that's vibrant because of underlying demand than in one propped up by an arbitrary presidential policy the next guy who comes into office could promptly cancel. There should be good jobs for people who forego college, but why do they have to be in manufacturing? The Labor Dept. says the three fastest-growing jobs of the next 10 years will be windturbine technicians (average pay: $61,770 per year), solar panel installers ($48,800 per year), and nurse practitioners ($126,260 per year). Those are all service jobs. Other non-college jobs among the top 20: veterinary assistants ($36,440), personal care aides ($33,530), veterinary technologists ($43,740), and logisticians ($79,400). There's a well-known need for more skilled tradespeople such as electricians, carpenters, framers, plumbers, and welders. The ever-growing healthcare sector needs all manner of technicians. Good salespeople are always valuable because they generate revenue. Coding schools now allow people to learn digital skills at a fraction of the cost or time of a college education. These are jobs that already exist. No president has to 'bring them back.' Getting the required skills isn't necessarily easy, but neither is manufacturing these days. It often requires specialized training needed to operate complex machinery, not to mention routine drug testing for safety and liability reasons. Most economists think Trump's use of tariffs to revitalize manufacturing will be self-defeating, because the higher prices that protect some domestic industries will damage others by raising their costs. But even if Trump's plan did boost overall manufacturing output and employment, it would be an effort focused on just one-tenth of the economy, at best. Trump, of course, is a 78-year-old creature of the 20th century, when smokestacks were a sign of progress and most things were analog. Tariffs seem to make sense to him because they apply to stuff that comes out of factories. Most of America's output doesn't come from an assembly line, however, and Trump won't change that. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. Sign in to access your portfolio
