Discussion on whether it means the end of the post -war world of free trade

The powerful set of Tariff Trump President is intended for part of the US industry, raising money and – as we have seen – is used as a negotiating chip.

Republican has already imposed a tariff imports from Chinaannounced plans for a 25% of customs duties on all of steel imports and aluminumand threatened to accommodate 25% of tariffs in Canada and Mexico. We do not yet know how far it will go, but if what is already on the table, it would increase the average tariffs to their most since the 1940s, signaling a new chapter for the global trade.

Since the end of World War II in 1945, the tariffs have been widely considered that they lead to higher consumer prices, smaller choices and – in the midst of the inevitable retaliation – the return of the industry they were supposed to protect. But do we turn our backs at this time?

I hosted a discussion with two economic experts from a trade policy to eliminate the implications of Trump’s policies on America and the world and explored different views on who could be the biggest winners or losers among us.

Meredith Crowley is a professor of economics at the University of Cambridge. She believes the tariffs could lead to a much higher economic burden for people with the lowest income.

Jeff Ferry is the main economist Emeritus in the coalition for prosperous America. He believes that tariffs can start growth and renew the US processing industry.

Dharshini David (DD): President Trump described the tariff as “the most beautiful word in the dictionary” – which is really intriguing. What is the attraction for him?

Jeff Ferry (JF): I think Trump quite clearly said that he thought the tariffs were for several reasons ‘beautiful’ things.

First, because they can revive and rebuild the US processing industry. He also sees the US manages a huge trade deficit. In 2024, we had a record retail trade deficit of $ 1.2 trillion, which means that the rest of the world, and especially the trade surplus, generates large amounts of revenue in sale in the US market. This is now given by a powerful negotiating tool and we have seen it using it, regarding drugs and immigration with Canada and Mexico in the last few days.

Meredith Crowley (MC): My assumption is that what actually refers to Trump is a decrease in production affairs in the United States in the last 40 years.

He noticed that there were a lot of jobs that once existed in the United States moved to other countries with lower wages like Mexico and China, and I think his hope would be that by imposing a tariff, he could stimulate job creation.

DD: We know that countries think and retaliate. To what extent will these measures affect Trump’s economic goals?

Jf: There is no doubt that tariff politics, along with the policy of the investment and growth strategy and national security policy, will grow American economy and do a better job of providing productivity growth than we have seen in the last 25 years, which have been honestly, have been rude to traditional American standards.

500 years of history shows that the economic profession, in its obsession with short -term balance, has done a favor not only to the US workers and the American people, but, to British people and British workers – and workers in many countries.

DD: In the post -war era we saw the demolition of trade barriers and the idea that globalization is good. Do we now see a return reaction against this?

Jf: We see a historical shift from consensus after World War II, which came from a period when America was ahead of the rest of the world – and America was very concerned about the communist threat.

So what you call “free trade” and I would call Bretton Woods The consensus of a fixed course, designed for America to support and even subsidize the growth of European economies and other economies.

We have now moved to a new phase in which it is well known that the American economy began to collapse in the 1970s, and China has grown to become a worldwide production power through the exploitation of all rules in the system.

We need a new system.

MC: I have a different diagnosis of what happened in recent history.

Over the last 40 years, clearly greater protection is very popular. Between 1981 and 1994, the United States limited car imports from Japan and that ultimately had two consequences.

First, she increased the price of a car for Americans. Secondly, in the long run, it has led to the investment of Japanese manufacturers in the United States, and today it now has a living automotive industry. You could directly support the US industry by direct government support.

Trump has now created uncertainty that Canadian manufacturers will have access to the US market in the future. And since Trump has done good in his threats in 2018 to impose tariffs to China, large corporations can revise plans for expanding business in Canada or Mexico to serve the US market. In these trade partners, it will follow withdrawing real economic activity.

DD: Meredith, Trump acknowledged that in the short term it can be “a little pain” for Americans, because as you mentioned, the tariffs tend to mean higher prices.

MC: Study of what happened in the first round of Trump’s tariffs at China 2018 showed, in the first two years, that most of the costs were absorbed by importers and distributors and did not transfer to consumers. However, the price increases, it usually comes gradually.

Once you realize that the tariff is permanently in place, the manufacturer realizes that everyone will have to pay it and they gradually increase the prices.

One of the concerns of economists is people who buy a lot of goods, not services, are usually people with smaller revenues. So, when you put a tariff on things like children’s coaches, backpacks and clothing, these types of consumer objects, you really make much more difficult tax burden for people with the lowest revenues in the country, not someone who spends their money on vacation and private education for children.

DD: Jeff, are you concerned about the global trade war that could regain Trump’s goals?

Jf: We’ve been in a trade war since 2001, since China has entered the World Trade Community. The trade war is a longtime. Now America is taking measures and a lot of people throw their hands, not because they are worried about the trade war, but because they are worried, they could lose their valuable market for their products.

But I want to go back to the consumer prices.

People focus solely on the negative. The purpose of the tariff is to encourage the domestic industry, so on the positive side you create brand new investments in the domestic industry. On the negative side you get price increase. So critically depends on the numbers in both cases.

What we know from the first round of Trump’s tariffs, between 2018 and 2019, is the price of tariff goods, such as steel, but the companies have committed to building new factories like steel mills that hired several hundred people – big jobs with blue collar for People who generally speak do not have a college degree.

The current phase of globalization that started around 1990 was just a huge mistake. The idea that now could compete with Mexico on salaries, especially for the production of workers, was just crazy.

DD: Let me have Meredith’s view of that. Would you agree that for the economy with higher wages, honestly, globalization was not a great idea since the 1990s?

MC: I understand Jeff’s view that the only president’s concern should be the benefit of Americans. But between 1990 and 2023, the number of people around the world living in extreme poverty at less than $ 2.15 (£ 1.75) fell from two billion to about 700 million daily. Over billion people who come out poverty due to increasing globalization is astonishing to achieve humanity.

It is quite clear to everyone that in American society, the benefits of globalization were not equal, so there is a real need in the US -to think about how to improve the benefit of less qualified people and how we will get into the business to help them.

Where I differ with Trump, I think there are more effective tools. You need industrial policy or production subsidies. American productivity is so high because we are constantly investing in work savings technology, but the consequence is that less skillful remained behind them and their lives are materially worse than they were thirty years ago.

Jf: I agree with a hundred percent with Meredith.

DD: This is fascinating. If we see the type of trade barriers that Trump wants to establish, what does this mean for this issue of equality?

MC: Once you start putting barriers between countries, you create a lot of opportunities for what we call a monopoly profit in the economy world. Once you limit their entry, existing manufacturers get their prices and exploit consumers.

If they are now going to a trade war with China, what will happen to imports from countries that are not interested in the trade war with now?

If China and China deepen their trade war, it could affect participation in the supply chain of sub-Saharan African countries with the US and China, which means that it will be one of the areas of the world that carry part of this trade war.

Thus, overflowing effects could be very, very negative.

DD: Jeff, is this the price worth paying? What impact could we see on growth?

Jf: I do not mean this as a price worth paying, I consider it as an evolution of the world system in which we will increase everywhere everywhere. And here I differ with the main economic view that focuses too much on trade and less productivity gains.

The world grew up with the success of the industry. Prosperity in the US from 1900 to 1970. It is mainly due to the automotive industry. What you saw were huge productivity gains while Henry Ford and all his heirs invented and developed mass production. You have seen a salary increase and an increase in consumption and we had the most prominent economy in the world.

So, what we need is industrial growth and when you look at the framework of national security, we cannot be dependent on China for as much goods as it is today. We are too dependent on China here in the United States, Europe is too dependent on China. So, what is the resolution? Well, the resolution is quite obvious – we have to make some goods here in the US.

Produced by: Rosemary McCabe, Rhoda Buchanan and Harriet Whitehead

Credit on top image: Getty Images

This transcript is decorated for clarity and conciseness.

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