The stock market and economists react to tariffs

On April 2, President Trump announced so-called reciprocal tariffs on imports from about 90 nations, adding to a 10% global tax applied to all products shipped to the U.S.

The president says the new taxes are needed to erase trade imbalances between the U.S. and other countries, ranging from China to members of the European Union.

Many economists have said the tariffs will weaken the U.S economy and drive the cost of products up– from produce to cars– and cost consumers more.

Jim Rounds, President of Rounds Consulting joined “Arizona Horizon” to discuss.

“We’re seeing economic impacts that are going to go beyond just the tariffs but on the tariffs themselves, we all need to keep in mind that as we impose these, we’re the ones paying for it,” Rounds said.

He predicted that people with low-income will struggle with these new tariffs. They also have affected the stock market.

“China is the biggest violator of property rights, intellectual property rights violations and so, if someone innovated in the U.S. they immediately reverse engineer it and then they put out the product for a quarter of the price because they didn’t have to go through all the costs. The president is trying to punish China, not just based on any prior tariffs, he’s trying to say ‘Quit doing all this stuff,’ so it’s more of a tool,” Rounds said.

There has been talk about returning manufacturing back to the U.S. He said bringing back manufacturing is not good for the economy, that trade has been created to benefit both countries. Also, there are so many small products that contribute to larger products across the world that are sold in the U.S., manufacturing it all could get very confusing, according to Rounds.

“We need to lift everybody up. That’s how we end up getting out of this financial mess. It’s not bringing back making plastic toys and then we have the tariffs on top of that so instead of $1 stores, we have $2 stores, but is that really helping anybody?” Rounds said.

He said the U.S. is not in a recession currently however in the future, there is a possibility of one. If there are severe cuts such as on Medicaid, then the U.S. could face a recession, according to Rounds.