Trump Tariffs to Be Recessionary, Could Spark Inflation Redux, Economist Says

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Donald Trump’s proposed tariffs on imports would have “recessionary” effects on the US economy and could end up sending inflation higher again, according to top economist Kenneth Rogoff.

The Harvard professor and former chief economist of the International Monetary Fund pointed to Trump’s proposed economic policies ahead of the November election, which include implementing a base tariff of 10% on all US imports, and tariffs of more than 60% on Chinese goods.

Rogoff said that Trump’s proposed policies and Joe Biden’s Inflation Reduction Act make them both the “most protectionist” presidential candidates the US has seen in a while, Rogoff said to Bloomberg on Wednesday.

“10% tariffs I think would push up inflation. They’d push up interest rates,” Rogoff said. “If you do it out of the blue, it’s very dislocating to the economy. I think it would tend to be very recessionary, inflationary,” he said.

Raising tariffs on foreign goods also raises the risk that other countries could retaliate, potentially sparking a trade war with partners like China, other economists have warned. That could hamper economic growth and stoke inflation, making Trump one of the biggest threats to the global economy, “Dr. Doom” economist Nouriel Roubini recently argued. 

Either a Trump or a Biden presidency would also likely further stoke the national debt, as neither candidate looks poised to dial back the pace of spending anytime soon, according to Rogoff.

“Washington in general has a very relaxed attitude toward debt that I think they’re going to be sorry about. Biden’s speech suggested blowing up the debt. And of course, we have really no idea what Donald Trump will do, but that’s what he did last time he was president,” he said.

The government’s rapid pace of spending is an issue that has worried economists for a long time, with concerns ramping up most recently during the bond-market turmoil at the end of 2023. At its current pace, policymakers are racking up $1 trillion of extra debt every 100 days, Bank of America analysts said.

Rogoff has warned of another rocky year headed for the US economy. That’s due to a handful of factors that could stoke volatility, including higher-for-longer interest rates, Congress overspending, and economic shifts in countries like China and Japan, he said in a previous op-ed for Project Syndicate.