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11 07 24 CSU Economics Prof Stephan Weiler on Trump's threat of increased tariffs
But there's only one feeling like knowing your banker personally, like growing up with a bank you can count on, like being sure what you've earned is safe, secure, and local. There's only one feeling like knowing you're supporting your community. You deserve more from a bank. You deserve an institution that stood strong for generations. Bank of Colorado, there's only one member FDIC. It is Colorado's morning news. What would economic policy look like in a second Trump administration? The President-elect has said tariffs were playing a major role. And joining us now on the KAOA common spirit health hotline to talk more about it is CSU economics professor, Stefan Weiler. Professor Weiler, thank you so much for your time. As always, our business and money editor, Pat Woodard, joining us as well as we talk a little bit about these proposed tariffs we've seen from President-elect Trump. Are some of the ones we've already seen proposed, and are they realistic? Mexico got a warning from a speech that he gave in North Carolina that, like on day one, unless Mexico stops the flow of the immigrants across the southern border, they're going to throw 25% tariffs on Mexico, and that's one of our biggest trading partners. Tariffs are going to go up, there's no question, and what that's going to do is raise prices for consumers. Ironically, part of the reason that Trump got elected was because of the inflation under the previous administration caused, I think largely, by COVID. Prices will not go down, that's for sure, and the tariffs will bring inflation up around the economy, and that's something already to be watching. Now when President Trump, former President Trump, and now President-elect Trump imposed tariffs on his first administration, there was similar concern, but the Biden administration quietly kept many of those tariffs in place, and even extended some of them. So are all tariffs bad, or does it depend on the industry, the trading partner, and other factors? It depends on the industry, it's a good point, Pat. For example, we talked, I think last time about the infant industry argument, for instance, electric vehicles, that tariffs can protect an industry that's just giving birth and just trying to figure out how to put the pieces together like electric vehicles. And so specific industries can benefit from that, but the problem is that consumers in general lose because of the prices, and the prices aren't only going up because of tariffs, there's also going to be retaliation. Other countries are going to set up tariffs against us, and that's going to make things particularly hot. Professor, you read a quote that I read, and from hardly a liberal outlet, the Cato Institute talking about that tariffs aren't technically inflationary, but they do raise the price of tariff products, and the irony they find with that is the fact that the President-elect most much of his victory last night to Americans upset about high prices, and as you allude to, the prices can go up with that specifically. The President-elect floating in an idea of a 20% to 20% universal tariff on all imports, 60% on Chinese goods, and just last month, they 200% tariff on more on cars from Mexico. I mean, when you hear those numbers, what kind of money are we talking about that they think they can get, but how much is that distilled down to us as the consumer? It's basically most of the tariffs tend to trickle down to the consumer, that producers are able to basically crank up prices because people don't have any choices, basically, and that's what we were talking about price gouging before. This might become another watch for the coming administration. A couple of other things that we talked about prior to getting on the air is also the immigration and deportations. That is another promise by the administration, and that has a couple of real problems for the economy. One is agriculture largely depends on immigrants and illegal, including illegal immigrants. Now, here illegally, they should be deported or a route to citizenship should be found. The problem is it also means that you're losing young population, and young population right now is paying social security, Medicare for the eligibility, and so you need to be careful about just throwing people out because right now they're paying taxes that are helping Americans themselves. Professor, what is the timeline? Do consumers feel the effects of tariffs almost instantly, or is it usually a trickle-down effect when we start to see the higher prices? There is a trickle-down effect, but some things are going fast. For example, the bond market is going up dizzyingly fast because everybody is expecting Trump to reduce taxes and to increase borrowing. They've estimated that the increased borrowing is going to be about $8 trillion under President Trump, where it's been $4 trillion under Kamala Harris. So the bond market is up to speed already, and the Fed is also going to be also under pressure to lower rates, and that also can be too further inflation as well. One of the things that Trump has said is that the cost of the tariffs could at least be partially offset by tax cuts, and he's talked about reducing the corporate income tax rate. Does that really correlate with the inflationary cost of the tariffs? The tariffs will still be inflationary. I think the big issue when you talk about both tariffs and about reducing taxes at the same time as the amount of borrowing that's going to have to occur. So the bond market determines interest rates. People who are looking around for houses now, I mean, mortgage rates unfortunately are going to probably go up along with the bond market, and that's a hard thing when we've been talking about affordable housing, you know, throughout several of these shows. Colorado State University Economics Professor Stephen Weiler, thank you as always. That's great. Thanks very much. There's only one feeling like knowing your banker personally, like growing up with a bank you can count on, like being sure what you've earned is safe, secure, and local. There's only one feeling like knowing you're supporting your community. You deserve more from a bank, you deserve an institution that stood strong for generations. Bank of Colorado, there's only one member FDIC. At Sprouts Farmers Market, we're all about fresh, healthy, and delicious. That's why you'll find the season's best organic produce handpicked and waiting for you in the center of our store. 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