With President Trump unleashing sweeping tariffs, here’s how it might impact your wallet.
Catch the full interview with Moody’s Analytics Chief economist Mark Zandi here:
Transcript:
CAROLINE WOODS: Well, we also have the tariff deadline on Friday. We know that President Trump has said it will not be extended. We’ll see if that’s actually the case. But it sounds to me like you think that will be more of a one off kind of price shock. But how should we be thinking about the economic impact of even one off higher prices?
MARK ZANDI: Yeah it’s not good. I mean, and in fact, you know, you look through all the ups and Downs and all the rounds and the tariffs. And the noise. Tariff rates are going up and they’re going up a lot. I mean, if you go back to the beginning of the year, the effective tariff rate across all countries products was just over 2% now with everything in place, it feels like we’re going to settle in somewhere around 15% to 20% That’s a very substantive increase. And that means higher prices and inflation will pick up. I think the price level will rise by a point, a point and a half. So instead of inflation where it is today at 2.5% that’s the consumer expenditure deflator. That’s that measure will be at 3 and 1/2 4% by next spring summer. That’s pretty substantive. And it will also mean weaker growth because those tariff increases. Those higher prices are effective. You know, tax increase. It cuts into people’s purchasing power. You know, if I have to spend more on an imported good, you know, food, or clothing or whatever it is less to spend on everything else. And so that cuts into economic growth. So, I buckle in, I think the next six, 12 months are going to be uncomfortable for the economy. I think we’ll be able to avoid recession, but it’s very close. And I think we can say with a high degree of confidence that it’s going to be an uncomfortable environment.
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