CHATTANOGA, Tenn. (WDEF)- There have been several developments Thursday as it relates to tariffs enacted by President Donald Trump.
As these developments unfold, UTC’s chief economist gave his take on the effectiveness of these tariffs to the Downtown Rotary Club.
President Trump announced on Thursday a deal had been reached with Mexico to avoid tariffs being enacted for 90 days.
However, he plans to sign other tariffs into law via executive action on Friday.
At Thursday’s Rotary Club meeting, Dr. Howard Wall, the chief economist of UTC’s Center of Regional Economic Research, argued that the rationale for these tariffs don’t add up.
Dr. Wall said, “You have to trade more with them, you’re going to have a trade deficit if you want them to invest in you. So for overall national income or something, a trade deficit is not a negative thing.”
Dr. Wall in particular pointed towards arguments such as America’s large trade deficits, tariffs are paid for by other countries, and that they ensure fair deals are arguments he believes will have a net negative for both our regional and national economy.
He posited that the day to day American economy would not properly function without trade deficits, arguing that consumerism is a kind of trade deficit.
Dr. Wall said, “Unless all of you are farmers, I assume all of you have trade deficits with Publix or Food City, but none of you I think are imposing taxes on yourself to get rid of this terrible trade deficit with Food City.”
President Trump’s allies, including Tennessee Senator Bill Hagerty, maintain their position that his moves on this issue are necessary to protect domestic interests.
Sen. Hagerty told WCLE 104.1 in Cleveland that, “We have been the most open market, lowest tariff barriers anywhere in the world, and we are the largest market in the world. President Trump and very obviously said, “Look, our market is a privilege, not a right. We’ve been abused for too long and it’s time to right the situation.””
A federal appeals court in Washington did hear a case Thursday that could determine if the President will be allowed to continue imposing tariffs via executive order.
Dr. Wall says he believes the markets are anticipating what the decision of that case will be.
He said, “I suspect, but I’m not a lawyer, but I suspect when this gets to the Supreme Court that it will be pretty clear that he does not have the authority. So I suspect that a lot of the people in the market are aware that these tariffs are crazy, but it the end, it probably won’t be constitutional.”
It is unclear when that federal appellate court will decide on the President’s executive orders.
