00:00Let's now talk to Dr. Ashok Kumar, the Associate Professor of Political Economy at Birkbeck University of London.
00:06Professor, good to see you. We're just hours off Mr. Trump's announcement now at the White House.
00:11How do you think these tariffs will affect the US economy, particularly in terms of inflation and ordinary prices for shoppers?
00:22Well, if they are imposed, sort of universal tariffs, as some have suggested,
00:29again, it's really hard to say because, you know, Trump has announced sort of tariffs with Canada and Mexico
00:37and pulled back and used it as a bargaining chip. So if he does impose that, there's no question,
00:43and I don't think it's just a mainstream economics view, I think even heterodox economists,
00:47everyone who's looking at this can see very clearly that the prices for consumers is going to skyrocket.
00:54That may have an impact on GDP, on unemployment, on inflation, of course.
01:00So there's a lot of knock-on effects, not only for trade globally, but just in terms of the US economy.
01:06And so it's just simply the case that if you do targeted tariffs, like steel, etc., that have domestic production,
01:13you can actually see boosts in American consumption of American-made products.
01:18But if you see consumer durables, which aren't made in the US, or at least a large proportion of the supply chain isn't made in the US,
01:25there's no way you can turn that around, especially when there's such an instability in the market.
01:30Investors are simply not going to start building factories.
01:33So what's going to happen is you're going to see a rise in the prices of consumer durables.
01:37And you know, Mr. Trump's supporters might well say, if they were here,
01:41look, suck up the short-term pain, America is going to see the benefits long-term.
01:46Make American manufacturers great again, they might say. Do they have a point?
01:51Well, there's not much evidence to support that.
01:54I mean, if you're saying make America great again, you want to go back to the 1950s,
01:57before you had sort of the 1970s and globalization.
02:01The problem with that is when they tried bits of this in, say, Trump's first term,
02:06they introduced tariffs on Chinese products.
02:11China responded, and you saw a collapse of, say, US soy, because 75% reduction in soy.
02:18And it had to be bailed out by Trump.
02:21In 2018, he introduced tariffs on washing machines.
02:26That increased the price of not only imported washing machines,
02:31but also domestically produced washing machines by $86, because you saw a kind of price gouging,
02:37just like the agflation report you just gave.
02:40A lot of it has to do with monopoly producers' price gouging.
02:43They can get away with increasing prices, so they do,
02:45because they have no domestic competitors and international competitors, the price is going up.
02:50So they don't match it, but they increase the price.
02:53So the knock-on effect of something like this, when you don't have internal investment,
02:58will be not just a short term, but actually quite a long term,
03:03because there's no indication that in three years' time, when Trump is replaced,
03:07that these tariffs will stay in place,
03:09which means that investors aren't going to build the infrastructure that you need to produce in America.
03:16Professor, good to see you. Thanks for that.
03:18Dr. Ashok Kumar, Associate Professor of Political Economy at Birkbeck University of London.
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