SAN FRANCISCO (KCBS RADIO) – President Donald Trump has been hyping up “Liberation Day” this week – the start of new tariffs on U.S. trading partners – but is the math really mathing?
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Giacomo Santangelo, an economics professor at Fordham University, said that it isn’t. He joined KCBS Radio’s Holly Quan to break it down.
“Every economist is scratching their head,” he said. “I heard someone report last night that some economists are in favor of this. And I want you to know that everyone within the economics community is trying to find who those economists are… because they do not exist.”
To celebrate “Liberation Day” Trump gave a presentation with a chart outlining tariffs on U.S. goods from various countries, alongside tariffs from the U.S. He has announced “reciprocal tariffs,” that is tariffs on goods from outside the U.S. to match those imposed by other countries.
“I think the problem with that chart, once we account for the inaccuracies of the numbers themselves, is that that’s not the way trade policy works,” Santangelo explained. “There are specific tariffs on specific items coming from specific countries, not broadly defined, this is how much something is marked up in our country. So those numbers are estimations of... some sort of average that is not really realistic because the kind of tariff that you see on a U.S. automobile is different than the kind that you say on U.S. agricultural goods.”
He said that the White House has indicated that the tariffs will be on other nations when the people who will end up paying more are American consumers. That’s because these tariffs impact businesses buying goods from overseas that will likely pass along the extra cost as increase in the prices of their goods. At the end of the day that just means that Americans are going to be faced with higher prices at checkout.
“No one in any other country is going to pay a penny,” said Santangelo. He said that this could lead to disruption in important supply chains, such as the food supply chain, that could have significant negative consequences.
Trump, on the other hand, has been steadfast in his defense of the tariffs. He even said during his “Liberation Day” event that tariffs could have prevented the Great Depression. According to the president, the income tax established in 1913 is also to blame for that 1929 economic collapse.
However, Audacy has already explored how an attempt to alleviate the impact of the Great Depression using tariffs was an failure, as the economics teacher from Ferris Bueller’s Day Off explained. That attempt – the Hawley-Smoot Tariff Act – is actually considered “among the most catastrophic acts in congressional history,” per the U.S. Senate.
According to the Office of the Historian within the State Department, imports from Europe plummeted after the act was passed, falling from $1.3 billion to just $390 million by 1932. Exports to Europe also fell from $2.3 billion to $784 million.
During Trump’s Wednesday remarks, he announced a 10% tariff on all countries, set to go into effect on Friday. He also shared that around 60 countries will face higher reciprocal tariffs, set to go into effect on April 9 and a 25% tariff on all foreign-made automobiles.
WWJ Newsradio 950 auto analyst John McElroy shared on Thursday that the latest round of tariffs could impact consumers shopping for a new car.
“You’re going to see car prices go up,” McElroy said. “Now, one thing that the president did hint at is that maybe they’re going to allow you to deduct the interest on a car loan from your taxes. So that would help mitigate it somewhat, but there’s no question that cars and the parts that are used to service and repair them are going to go up in cost.”
Another expert, Leah Long of the Louisiana chapter of the National Federation of Independent Businesses, spoke about the impact small businesses may have if Trump’s tariffs go through in an interview with WWL News Radio this week.
“We have heard from a few small business owners that are currently impacted, or they’re concerned,” she said. “On the federal level, we have heard some kind of complaint about tariffs.”
Santangelo said the impact from the new tariffs is already beginning to become apparent though the week isn’t over yet.
“There is no part of this that makes sense, economically,” he told KCBS Radio. “And I think we’re seeing the repercussions of that today. World leaders, the world over, are talking about the fact that this is not just bad for the U.S., but this is also bad for the globe.”
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