News

Key Takeaways

President Donald Trump has taken U.S. trade policy and the economy on a rollercoaster ride over the last four months. Two charts illustrate how wild a journey it's been.

First, the big picture: High import taxes have been out of style for decades. Leaders from both major parties have accepted the conventional economic wisdom that countries are more prosperous when they trade with one another with fewer restrictions. Trump rebuked that policy by raising tariffs to levels not seen since the 1930s, in an effort to encourage companies to manufacture products in the U.S. instead of abroad.

The rollout of those high tariffs has been chaotic. Since January, Trump has proposed, implemented, rescinded, and modified various tariffs in rapid succession, sometimes leaving them in place for just days. The Washington Post tracked 50 separate announcements and revisions to tariff policy during that time.

The swift changes have made assessing the economy more complex than usual for forecasters and businesses. But there's little doubt among trade experts that when the smoke clears, the import taxes will significantly impact the economy's trajectory, for better or worse.

Goldman Sachs Economist Manuel Abecasis predicted the tariffs would damage the economy in multiple ways, reducing efficiencies gained by trade, deterring innovation, and discouraging investment.

Read the original article on Investopedia