Will President Donald Trump back down on his tariff plans in the wake of criticism and falling approval ratings? Some signs point to “yes” but things are still a bit unclear.
This week, Walter “Dub” Lane, associate professor of Economics & Finance at the University of New Orleans, joined Audacy to discuss the possibilities with WWL’s Tommy Tucker. They started off by discussing recent Gallup polling that found Americans’ perceptions of the economy have weakened.
“I think what you’re seeing in that poll is people are looking at their 401Ks or 403Bs… and they’re seeing that the stock market has fallen 9% and therefore the value of their retirement looks like it’s going down,” Lane explained. Audacy has previously reported on how Trump’s tariff announcements have taken the stock market on a roller coaster ride.
When Trump indicated this week that there might be an end in sight for his tariff war on China, the markets rallied, Lane noted.
“He also said that he won’t fire the head of the Federal Reserve - which scared, I think everybody in the world, when he said that,” Lane added. “And he saw what the reaction to that was, and so I think he’s backed down for one of the first times.”
Trump has said that the tariffs address multiple goals, including cracking down on fentanyl trafficking in the U.S. and evening out trade deficits. However, Lane is skeptical about whether tariffs can properly address those goals, or if the latter is a practical goal.
“The question is… is he using this as a negotiating tool to try to get better trade relations with some of the other countries and when he, if he gets that he’ll back down,” Lane explained. “Like, he’s talking with India in particular. And if all that happens, then I think you’ll see the stock market go back up and maybe we will gain something.”
Lane also mentioned that the Trump administration has also hinted that the trade war with China might soften soon. Still, he said it's not a sure thing. “We don’t know if that could happen, if that’s what’s going on,” Lane said.
In the meantime, he said we can expect the tariffs to contribute to inflation, at least in the short term. Other impacts the tariffs seem to be having already are making shipping complicated and lowering the value of U.S. currency, Lane added.
“When the dollar is weakening like that, then it means that… people have less confidence in the U.S. dollar,” he explained.
That’s an issue because our currency is used for investing. In fact, Lane said our Treasury bonds are generally considered the safest investment in the world.
“The question is, to me, is Trump’s tariffs… really partly a bargaining tool to try to get better deals with the rest of the world? And if that works and then he backs off on the tariffs, then you can say, you know, he’s a genius,” Lane told Tucker. “[I’m] not real confident that could happen, because I also heard [that] all his life that he simply thinks that the rest of the world is taking advantage of the U.S., because we import from them more than we export. But, he doesn’t even understand that people want dollars because… they want to invest in the United States, and I don’t think that’s such a bad thing.”