Conference Presentation, Fireside Chat
Were we wrong about Trump's tariffs?
- The U.S. economy is projected to face significant impacts from tariff levels described as the highest in 90 years, with growth losses in the first half of the year compounding into long-term lost opportunities rather than solely immediate recession risks.
- Tariff cost pass-through to consumer prices is expected to begin slowly before eventually reaching 80 percent, surpassing current levels despite potential variations.
- Firms adjusting to tariff protection are expected to resist the removal of these measures due to the cost advantages they provide, creating structural barriers to de-escalation.
- The absence of Most-Favored-Nation status and the unpredictable nature of the tariff policy are anticipated to act as a constant economic drag, causing relative damage to the U.S. to rise as global markets integrate and the U.S. effectively builds an economic fortress.
- Establishing a fiscal reliance on government revenue from tariffs creates pressure to maintain these measures, as replacing this revenue stream and removing concentrated corporate lobbying interests will be difficult for future administrations.
- While the political landscape may see a thermostatic response with Democrats shifting toward a pro-trade stance, reversing the current tariff regime is considered unlikely due to entrenched fiscal dependencies and the difficulty of dismantling the established system.