A look at Trump’s tariffs and the economic consequences for consumer prices and businesses

William Brangham:

The Chinese embassy in the U.S. also responded, saying — quote — “No one will win a trade war.”

Canadian Prime Minister Justin Trudeau said he spoke with Trump on the phone later and said he will hold an emergency meeting with Canada’s provincial and territorial leaders.

The economic consequences of these tariffs could be enormous, involving multiple industries, consumer goods and groceries. Put together, last year, China, Mexico and Canada bought more than $1 trillion worth of U.S. exports, and they sold nearly $1.5 trillion worth of goods and services to the U.S.

So to help us understand more about what’s happening, we are joined by economist Mary Lovely. She’s a senior fellow at the Peterson Institute for International Economics.

Mary, thank you so much for being here.

We should say that we do not know if Trump is going to go through with this threat, as he stated it. But let’s say he does, for the sake of conversation. Mexico, Canada, and China are enormous trading partners of ours. If these tariffs get slapped on, what does that mean for businesses and consumers?

Mary Lovely, Peterson Institute for International Economics: Yes, it’s great to be here with you, William.

I think, in a word, what it means is nothing good. So these three trading partners are about one-third of all our exports and imports. So it’s an enormous part of the business that we do. And, clearly, if he goes ahead and puts these tariffs on these imports, we are going to see a number of important ramifications, first for businesses and for consumers.

For businesses, obviously higher costs, supply chain disruptions, and possibly the movement of investment out of the United States or away from the United States. For consumers, higher prices at the cash register and, as we have shown in previous work, a burden that will form more heavily on the poor and the middle class.

So, really nothing good coming out of these tariffs.