U.S. companies “are really living, it seems, permanently in uncertainty city,” as the Trump administration’s tariff policy looms large over businesses, said James Pethokoukis, economic policy analyst at American Enterprise Institute.
Unclear policy makes it difficult for businesses to make large investments. “Uncertainty is the enemy of really what you want in an economy,” said former Secretary of Labor and current University of California, Berkeley Professor Robert Reich.
President Trump has said the tariffs are meant to bring manufacturing back to the U.S. Economist Danielle DiMartino Booth warns the initiative is going to take a long time and requires a predictable environment. “If you’re going to try and incentivize American companies to buy from American producers, then you have to understand that we need certainty in order for companies to plan producing in the United States, and you’ve got to give them a few years to put that plant and equipment in place.”
In the meantime, economists warn U.S. consumers will pay more. “So far the pass-through of tariffs into higher prices has been very modest, but we’re still in early stages,” said Harvard Professor Carmen Reinhart.
“Tariffs are leading to higher inflation. Prices are rising,” said chief economist at Moody’s Analytics Mark Zandi. PIMCO’s head of public policy, Libby Cantrill, explained, “We do think that consumers will ultimately pay at least some of this tariff and that will slow consumption. And of course, in a 70% consumer-based economy, that will likely weigh on growth.”
Watch the video to find out more about how economists see President Trump’s tariff economic policy affecting the U.S. economy.
