Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
Can Trump's tariff plan boost the US economy?
President-elect Donald Trump has made no secret of his love of tariffs, vowing steep import taxes on China, Mexico, Canada, and almost every product that crosses the US border on his first day in office. Will they boost US jobs and manufacturing, as Trump promises, or lead to rising inflation, as many economists warn? On GZERO World, Oren Cass, founder and chief economist at conservative think tank American Compass, joins Ian Bremmer for an in-depth discussion about Trump’s tariff plan and the future of US-China trade policy. Cass believes that tariffs are a way to level the playing field with China, which he says “flouts international rules and any concept of a free market.” He says tariffs can help correct global trade imbalances and doesn’t believe they’ll lead to a dramatic spike in consumer prices.
“When you raise money through a tariff, you don’t set that money on fire. It’s also tax revenue,” Cass explains, “We have a $2 trillion deficit. If I told you that there was some other tax that was going to help reduce the deficit, you’d probably say that would help reign inflation in.”
Watch full episode: The case for Trump's tariffs
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).
The case for Trump's tariffs
What will President-Elect Donald Trump’s election win mean for the US economy? After years of inflation and stagnating wage growth, millions of voters elected Trump off the back of his promise to usher in a “golden age of America.” Trump has vowed to raise tariffs, slash business regulation, and deport millions of undocumented immigrants, policies he says will put Americans first. But what will that mean practically for workers and consumers? On GZERO World, Ian Bremmer is joined by Oren Cass, the founder and chief economist of the conservative think tank American Compass, who thinks Trump’s tariff plan will be a step in the right direction. Many economists argue that Trump's tariff plans will raise consumer prices and spark a global trade war, but Cass argues they're a necessary correction that will incentivize domestic manufacturing, reduce the deficit, and counter China’s unfair trade practices.
“If you actually believe that making things in America matters, then we are going to have to find a way to put a thumb on the scale for getting more of that investment back here,” Cass explains, “And I think that's what a tariff can help do.”
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).
What Donald Trump's second term will mean for the US economy
Listen: Donald Trump has promised to fix what he calls a broken economy and usher in a “golden age of America.” He’s vowed to implement record tariffs, slash regulation, and deport millions of undocumented immigrants. But what will that mean practically for America’s economic future? On the GZERO World Podcast, Ian Bremmer is joined by Oren Cass, founder and chief economist at the conservative think tank American Compass, to discuss Trump’s economic agenda and why Cass believes it will help American workers and businesses in the long run. Mass deportations, he says, will lead to a tighter labor market that will force employers to raise wages and increase working conditions. He also argues that steep tariffs are the only way to level the playing field with China, which has “flouted any concept of a free market or fair trade” for decades. However, many economists warn that Trump’s plan will lead to rising inflation and a global trade war. So what’s the biggest argument for an America first economic agenda? Will it really lead to long-term benefits for workers? Oren Cass makes his case.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.
- The economic fallout of Trump’s tariff threats ›
- How Javier Milei is turning Argentina's economy around ›
- How Trump won – and what it means for the world ›
- Kamala Harris and Donald Trump’s economic plans, compared ›
- Trump's close call and the RNC: Brian Stelter and Nicole Hemmer weigh in on a historic week in US politics ›
How Trump's tariffs could help (or hurt) the US economy
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).
The gap between Americans' perception of the economy and reality
As the candidates make their final arguments in the 2024 US Presidential Election, the economy is front and center on the minds of voters. Despite all signs indicating stable and above-trend growth in the US, many Americans feel uncertain about how well the economy is doing, said Robert Kahn, Managing Director of Global Macro-Geoeconomics at Eurasia Group. He discussed the gap in US economic perception versus reality with GZERO’s Tony Maciulis at the IMF and World Bank Annual Meetings in Washington, DC, in a Global Stage interview. Kahn noted that heightened political polarization has skewed views of economic performance while lingering geopolitical shocks and high prices add to concerns. Kahn emphasized that there is an element of worry around the “legacy of the pandemic…that Vice President Harris is just really struggling to overcome” even though underlying data proves otherwise. The two also discussed former President Trump's accusations that the Federal Reserve is "playing politics" with interest rates and what the impact would be globally if Trump were, as president, to assert a heavier hand in decision-making at the central bank.
A trader works on the trading floor at The New York Stock Exchange (NYSE) following the Federal Reserve rate announcement, in New York City, U.S., September 18, 2024.
The Fed goes big for its first rate cut since 2020
The Federal Reserve dropped interest rates by half of a percentage point on Wednesday, its first cut since 2020. The move – larger than the .25 bps that was also under consideration – is a show of confidence that inflation is moving sustainably toward 2%, and it aims to boost to the labor market. The cut will bring the benchmark federal-funds rate to a range between 4.75% and 5%.
The Fed decided that keeping rates high “was becoming restrictive and worried the labor market could turn sour quickly,” according to Robert Kahn, Eurasia Group’s managing director of macro-geoeconomics. “They didn't want to fall behind the curve and decided to get a quick start at easing.”
In the short term,anticipation of rate cuts boosted Wall Street, with the Dow Jones Industrial Average hitting a new record on Wednesday. Yields on the 10-year Treasury note stood at 3.64% on Tuesday, up slightly from a 52-week low recorded on Monday. It also bodes well for Kamala Harris’ campaign, since high interest rates had been souring voters’ views on the economy.
In the long term, the Fed “looks like they will move gradually from here,” says Kahn. “It's a quick start to a long journey.” Inflation expectations are also unlikely to be affected because “inflation has been coming down recently, so any new risks will take time to show themselves.”
Fed poised for 50 basis point rate cut
Breaking: Fed poised for 50 basis point rate cut
The Federal Reserve appears set to drop its benchmark interest rate by 50 base points today. That lending rate – which influences borrowing costs broadly – can put the economy in a chokehold when rates are high, or stimulate it when lowered.
According to Eurasia Group’s Managing Director of Global Macroeconomics Robert Kahn, “enough progress has been made on inflation to begin the process of easing financial conditions with a big first move to protect against recession.”
Lawmakers have repeatedly called on the Fed to lower rates over the past year. Still, the independent body has resisted, waiting for economic data to indicate that a soft landing – where inflation is tamed without a recession – appeared to be in sight. Inflation currently stands at 2.5%, down from its peak of 9.1% in 2022 and nearing the Fed’s 2% target.
Election effect: It takes time for monetary policy to make an impact, so any rate cut is unlikely to have a material effect on the economy before the election, but it will still have influence.
“It's possible that the cut, and the boost to markets that it could provide, gives a lift to sentiment surrounding the economy that helps the Harris campaign,” says Kahn. But, on the downside, “it will validate Donald Trump’s belief that the Fed is political and the move is being done to help his opponent.”US President Joe Biden waits to welcome President William Ruto of Kenya to the White House in Washington on May 22, 2024.
It’s Biden’s economy, stupid
The United States is plagued with a “vibecession” — where confidence in the economy is at stark odds with the actual data.
A new Harris poll forThe Guardian shows nearly three in five Americans believe the economy is shrinking and in recession. Nearly half of those polled also believe US unemployment is at a 50-year high.
But none of that is true.
So why the disconnect?
Much of the bad vibes are lingering from America’s post-COVID economic recovery. The US generally bounced backbetter than its peers, but inflation is still squeezing average Americans while the Federal Reserve is keeping interest rates high. Even if the stock market and GDP reachnewheights, so is Americans’ cost of living — and at a time when it costs more to borrow.
Another vibecession culprit: politics, baby. OneYouGov poll shows the percentage of Republican respondents who thought the economy was improving dropped from 64% in November 2020 to 6% after Biden’s inauguration in January 2021. Unsurprisingly, Democrats’ views on the economy also shot way up after Biden took office, without much changing economically.
If Americans’ perceptions of the economy are deeply entrenched with their political affiliation, is there anything Biden can do ahead of November’s election? His administration is working to bring downgas prices and slashstudent debt. But as long as prices and interest rates stay high, he may have a hard time swaying voters’ historically low confidence in his ability to do the right thing for the economy.