IMF warns against tariffs: They make the country’s residents ‘poor’
The International Monetary Fund (IMF) gave its latest forecast on the world economy on Tuesday, Oct. 22. During the meeting, IMF Chief Economist Pierre-Olivier Gourinchas warned trade restrictions could put downward pressure on that growth.
The global financial agency declined to comment on certain elections of proposals by presidential candidates. Excluding 2024 election promises, the IMF says its seen a tripling in trade-distorting measures from the U.S., China and EU from 2019 to now.
“When we look at the impact that rising trade tensions could have, there are two dimensions of this,” Gourinchas explained. “One is, of course, increasing tariffs between different blocs, that will disrupt trade, that will misallocate resources, that will weigh down on economic activity. But there is also an associated layer that comes from the uncertainty that increases related to future trade policy, and it will also depress investment, depress economic activity and consumption.
“And when we put these two together, we find an impact on world output that is of the order of about 0.5% of output levels in 2026. So it’s a quite sizable effect of both an increase in tariffs between different countries and an increase in trade policy uncertainty,” he continued.
He said it’s not just something that ultimately harms the global economy.
“They’re also hurtful for the countries that implement them as well because the impact on global trade also makes the residents of the country poor,” Gourinchas said.
It’s not a new view for economists worldwide. The nonpartisan Peterson Institute for International Economics estimates former President Donald Trump’s higher-end tariff proposals would cost the typical U.S. household $2,600 a year. However, it’s a finding the Republican candidate rejects.
“The higher the tariff, the more likely it is that the company will come into the United States and build a factory in the United States so it doesn’t have to pay the tariff,” Trump said.
In the latest AP-NORC poll, voters said they trust Trump more than Vice President Kamala Harris when it comes to tariff policies. As for whom voters trust more with the economy, Trump holds a slight edge at 43% compared to Harris at 41%.
When it comes to the current state of the U.S. economy, only 38% say it is somewhat or very good. The results are drastically different depending on the voter’s political party, with 13% of Republicans calling it good compared to 61% of Democrats.
Despite the vibes inside the country, the IMF rates the U.S. economy as “very good.”
“There is strong productivity growth that we see when we look at the U.S. that’s somewhat unlike other advanced economies, in fact, when we look around the world,” Gourinchas said.
The IMF expects the U.S. economy to grow at a 2.8% rate in 2024, compared to 1.8% among advanced economies as a whole.
China raises tariffs on European brandy in response to EU’s EV duty hike
China has raised tariffs on European brandy imports as part of its response to the European Union’s new tariffs on Chinese electric vehicles (EVs). The move comes after the EU approved duties of up to 45% on Chinese EVs.
The EU accuses Beijing of providing subsidies that artificially lower prices and create an unfair advantage for Chinese automakers over European brands.
In retaliation, China has increased tariffs on European brandy by as much as 39%, a decision that could impact some EU liquor brands, particularly those based in France. Chinese officials said preliminary findings of an anti-dumping investigation into EU brandy imports had determined that they “substantially damaged or threatened” China’s own domestic sector.
“I find these measures incomprehensible. There is no justification for them,” French Junior Trade Minister Sophie Primas responded in a statement. “We are very disappointed by this announcement, which goes against the commitment made by President Xi during his visit to France.”
China is the second-largest importer of brandy from the European Union, representing a market for the alcohol valued at over $1.5 billion. France, which backed the EU’s tariff increase on Chinese EVs, is expected to bear the brunt of China’s responding duty hike, as it accounted for 99.8% of the EU’s brandy exports to China last year.
“This announcement clearly shows that China is determined to tax us in response to European decisions on Chinese electric vehicles,” the Bureau National Interprofessionnel du Cognac, a French industry group, said in a statement.
The Chinese government’s response may not stop at brandy. A spokesperson from China’s Ministry of Commerce confirmed that officials are also considering increasing tariffs on European large-engine car imports, signaling further potential measures in the escalating trade tensions.
Trump wants 200% tariff on foreign cars, here’s how to tell where a car was made
Former President Donald Trump is warning automakers not to move their production to Mexico. During a campaign speech in Wisconsin, Trump said he’d put a 200% tariff on vehicles that are made south of the border.
“They think they’re going to build them cheap and sell them into our country and destroy Michigan and all these wonderful states,” Trump told the crowd. “We’ll put a tariff of 200% on if we have to. We’re not going to let it happen. We’re not letting those cars come into the United States and destroy our car industry, you won’t have anything left.”
According to Reuters, about 3 million vehicles came into the United States from Mexico in 2023. About half belonged to Ford, Stellantis and General Motors.
Trump previously said he’d put a 100% tariff on imported cars and trucks.
According to the Tax Policy Center (TPC), if Trump implemented the tariff, it would increase the price of imported and domestic vehicles, both new and used. The TPC also said it could lead to layoffs for American workers.
President Joe Biden placed a 100% tariff on electric vehicles made in China because he said the country was subsidizing the extraordinarily low prices in order to get a foothold in the market.
There are multiple ways to learn where a vehicle was made, both before or after it’s bought. The easiest is searching the VIN.
If the VIN starts with a 1, 4, or 5 it was made in America. If it starts with another number or letter it was likely made somewhere else. The country of origin could be as close as Canada or Mexico or as far as Asia.
The National Highway Traffic Safety Administration has a VIN decoder which provides detailed information about a car.
Searching cars from a local dealership can be enlightening. The Ford Bronco is made in Mexico along with the Chevy Blazer. Toyota Corolla models with standard gas engines are often built in Blue Springs, Mississippi while Corolla hybrids are built in Japan.
Harris and Trump both make national debt worse, ‘especially Trump’
Policies proposed by former President Donald Trump would add more than twice as much to the national debt as policies proposed by Vice President Kamala Harris, according to a bipartisan analysis by the Committee for a Responsible Federal Budget. The middle estimate for Harris’ plans is that they increase the debt by $3.5 trillion through 2035, whereas Trump’s middle estimate adds $7.5 trillion.
On the low end of the range, Harris adds nothing while Trump adds $1.45 trillion. On the high end, Harris’ proposals have the ability to add $8.1 trillion while Trump’s tops out at $15.15 trillion.
“The bottom line is that we are already adding tremendously to the national debt under current law, and both candidates would make that even worse, especially President Trump,” Marc Goldwein, senior vice president and senior policy director at CRFB, said.
The national debt today is nearly $35.7 trillion. It currently costs more than $1 trillion in interest payments to maintain the current debt load.
We don’t endorse a particular candidate and we didn’t go in this trying to come up with a particular outcome. This is just the math.
Marc Goldwein, Committee for a Responsible Federal Budget
Straight Arrow News interviewed CRFB’s Goldwein for more information about the group’s economic analysis of both candidates. The following has been edited for clarity. Watch the full interview in the video above.
Simone Del Rosario: Why should voters care about the debt?
Marc Goldwein: Look, debt is eating our income growth. Debt is what causes inflation, what causes high interest rates and what causes interest payments to now be the second largest government program, larger than defense, larger than Medicare, and leaving less room for us to invest in just about anything else.
Simone Del Rosario: Your middle estimates for both candidates show that Harris would add about $3.5 trillion to the debt over the next decade while Trump would add $7.5 trillion in debt. What are the policies that are specifically adding to the debt for these two different candidates?
Marc Goldwein: For Vice President Harris, it’s [the] extension of some parts of the tax cuts from 2017, it’s a very big child tax credit, and then it’s a bunch of spending on everything from paid leave to childcare to long-term care to preschool, partially paid for with taxes on the rich and on corporations.
For President Trump, it’s mostly just a lot of tax cuts. We have a full extension of the Tax Cuts and Jobs Act, getting rid of the cap on the SALT deduction, no taxes on tips, no taxes on overtime, no taxes on Social Security benefits. And then on top of that, deportations and higher spending on defense; again, partially offset, mainly with tariffs, but in neither case are those offsets covering the costs.
Simone Del Rosario: Do your tariff estimates also include that 60% tariff on China?
Marc Goldwein: We do. Our central estimate assumes that there’s a 10% universal tariff. It’s 60% on China, and in addition, there’s some retaliatory tariffs on a one-off basis. But the important thing with these tariffs is, if they work as intended, they will reduce trade, and so they don’t raise as much revenue as you might think, just taking 10% of all of our imports, for example.
Marc Goldwein: That’s right, the tariffs could pay for some of the tax cuts, but they’ll barely cover the no taxes on tips and no taxes on overtime. They aren’t going to cover the $8 trillion-plus of tax cuts that President Trump is proposing.
Simone Del Rosario: And then, on the other hand, Marc, there is no guarantee that a potential President Harris would get those tax hikes on the rich that she’s looking for.
Marc Goldwein: That’s right. Look, in both the cases, these are highly speculative, because we’re analyzing what they’re calling for, not what will actually happen. In the real world, these offsets are hard. It’s hard to get taxes on the rich, taxes on corporations, tariffs, lower drug prices. It’s also hard to get some of the spending. So these are not predictions of what will happen. These are estimates of what would happen if the candidate’s plans were enacted in full.
Simone Del Rosario: So what should voters do with this information?
Marc Goldwein: They should demand offsets. Look, a debt is just tax on future generations. It’s a huge burden in terms of slower income growth, higher interest rates, higher inflation. And we need the candidates to be paying for their promises, and if they can’t, we need those promises to be scaled way back.
Simone Del Rosario: What aren’t you hearing from the candidates that you wish you were hearing at this point in the race?
Marc Goldwein: Social Security is nine years from insolvency. I’m not hearing a plan from either candidate to prevent that 21% across-the-board cut that’s scheduled to happen under current law.
Simone Del Rosario: And peel back the curtain for me a little bit and just explain how you guys went about this analysis. I assume it took you a very long time to do so.
Marc Goldwein: We went painstakingly through both candidates websites, through their platforms, through their speeches. We talked to the campaign staff, we looked at news articles, and we tried to discern what are official campaign policies, how do we interpret them, and how much do they cost? And each step of the way, we need to make a lot of choices, which is why we have a low-cost estimate and a high-cost estimate reflecting the range of possibilities, along with our central estimate.
I have to give credit to [my] amazing staff that put many, many, many hours into this over the last year, estimating every last policy, including policies that didn’t even make it to the finish line because they were rejected or because they were policies from the Biden campaign that didn’t make it over to the Harris campaign. But it’s an incredible amount of work and I recommend you checking out the report at CRFB.org. It’s pretty lengthy, but we have a short summary at the front that I think gives all the most important details.
Simone Del Rosario: Here at Straight Arrow News, we’re about unbiased, straight facts. We like to bring nonpartisan information to people so that they can decide for themselves as they get ready to vote in this upcoming election. How should people interpret these findings? Are they at all partisan?
Marc Goldwein: Look, we don’t endorse a particular candidate and we didn’t go in this trying to come up with a particular outcome. This is just the math. We looked at the candidate’s plans and this is what we think they would add to the debt.
You then need to weigh that against the benefits of whatever the candidates are offering. So one voter might say, sure they add a trillion dollars to the debt, but it’s for this very important policy; or sure they balance the budget, neither of them do, but let’s say they did, but they do in this awful way.
So fiscal policy, how much they add to the debt, should be just one consideration among many. I happen to think it’s a pretty darn important one because our debt is headed to the largest share of the economy it’s ever been. We’re heading to record levels of debt and I do fear we have a debt crisis on the horizon if we don’t do something.
But you need to vote based on what matters most to you, and this information is just meant to inform your decision, not to dictate it.
Simone Del Rosario: I want to thank you and your team for your analysis. We rely on you guys often to get the straight facts when it comes to how these policies impact our debt and our country. So thank you so much, Marc.
Former President Trump threatens 200% tariff on John Deere products
Former President Donald Trump has threatened a 200% tariff on John Deere products if the company moves manufacturing to Mexico, sparking debate on U.S. trade policy and its impact on domestic manufacturing. Trump issued an ultimatum to John Deere during a speech at a farming event in Pennsylvania on Monday, Sept. 23.
“John Deere — and anybody else that does this, because it’s hurting our farmers, it’s hurting our manufacturing, and if you do that you’re gonna have a 200% tariff put on the products that you make in Mexico, right across the border,” Trump said during the event. “They think they’re gonna make product cheaper in Mexico and then sell it here for the same price and make a lot of money by getting rid of our labor and our jobs and really a great name, because John Deere is a great name.”
Trump stated that he purchases a lot of John Deere products as a private citizen, and that his tariff policy would mean “our country is going to make a lot of money” on John Deere products if they’re manufactured in Mexico.
However, economists, business leaders and political opponents have raised concerns about the potential economic impact of Trump’s tariff plans, arguing they could harm U.S. households and businesses.
America’s agricultural sector is currently facing multiple challenges, including potential tariffs on equipment manufacturers, labor shortages and farmland consolidation.
Straight Arrow News reported earlier this month that some agricultural economists warn the farm economy is collapsing. In August, Purdue University’s Farmer Sentiment Index hit an eight-year low, indicating a notably bleak mood among farmers.
According to a recent University of Missouri survey, more than half of agricultural economists believe the farm economy is already in a recession.
The Federal Reserve Bank of Minneapolis reports that labor shortages have significantly worsened the situation for many in agriculture over the past five years.
US may effectively ban Chinese-made vehicles over national security concerns
The U.S. government may soon effectively prohibit the entry of Chinese-made vehicles as part of a new proposal aimed at addressing national security concerns. On Monday, Sept. 23, the Biden administration announced that it is considering new regulations that would restrict the use of certain Chinese technology in vehicles operating on American roads.
“Chinese automakers are seeking to dominate connected vehicle technologies in the United States and globally, posing new threats to our national security, including through our supply chains,” the White House said in a statement regarding the move. “The Biden-Harris administration is committed to ensuring that our automotive supply chains are resilient and secure from foreign threats.”
This proposal by the U.S. Commerce Department focuses on banning the use of key Chinese software and hardware in “connected” vehicles. Connected vehicles are those equipped with network hardware enabling internet access as well as data-sharing capabilities with devices both inside and outside the car. The new rule would extend to similar technology from other foreign adversaries, including Russia. Officials cited the potential for foreign countries to use these systems for espionage or sabotage.
“When foreign adversaries build software to make a vehicle that means it can be used for surveillance, can be remotely controlled, which threatens the privacy and safety of Americans on the road,” Commerce Secretary Gina Raimondo said. “In an extreme situation, a foreign adversary could shut down or take control of all their vehicles operating in the United States all at the same time.”
According to the government, this connected technology could allow foreign entities to monitor U.S. drivers or disrupt vehicle systems, potentially leading to accidents or the blocking of roadways. White House National Security Advisor Jake Sullivan stated that the more vehicles utilizing these technologies are deployed in the U.S., the higher the risk of malicious interference.
“Connected vehicles and the technology they use bring new vulnerabilities and threats, especially in the case of vehicles or components developed in the P.R.C. and other countries of concern,” Sullivan said. “With potentially millions of vehicles on the road, each with 10- to 15-year lifespans the risk of disruption and sabotage increases dramatically.”
The proposed ban would require automakers to phase out the use of these technologies in the coming years. For software-related components, the restrictions would take effect beginning with vehicles from the 2027 model year, while hardware bans would apply starting in 2029. The Commerce Department is offering a 30-day public comment period on the proposed rule before the Commerce Department plans to finalize the regulation by January 20th, 2025.
Tack on one more to Trump’s tax-cut pledges: No tax on overtime pay
Former President Donald Trump said on Thursday, Sept. 12, he would add another tax cut to his agenda if elected to the White House in November. This time, the Republican nominee pledged to eliminate taxes on overtime pay.
“The people who work overtime are among the hardest-working citizens in our country, and for too long, no one in Washington has been looking out for them,” Trump said during an event in Tucson, Arizona. “Those are the people that really work. They’re police officers, nurses, factory workers, construction workers, truck drivers and machine operators.”
For its part, the Harris campaign called the proposal a ploy to win over voters reliant on overtime income.
“He is desperate and scrambling and saying whatever it takes to try to trick people into voting for him,” Harris campaign spokesperson Joseph Costell said in a statement.
Before the former president suggested he would slash taxes on overtime, Harris claimed he had “blocked overtime benefits from millions of workers” while he was in the White House.
Under former President Barack Obama, the Labor Department proposed raising the threshold for overtime exemption to $47,476 from $23,660, which would have made millions more workers eligible for overtime pay. The Trump administration was able to change it to $35,568, short of what Democrats were hoping for.
Under President Joe Biden, the overtime threshold was raised to $43,888 in 2024 and starting Jan. 1, 2025, it increases to $58,656, meaning anyone making less than that must make overtime pay after 40 hours of work.
It is unclear at this time how much revenue the government brings in on overtime pay each year. But there has been plenty of analysis on his other proposals.
Extending the Trump tax cuts for the next 10 years would add $4.6 trillion to the national deficit, according to the nonpartisan Congressional Budget Office. Ending taxes on Social Security benefits would add between $1.6 trillion and $1.8 trillion through 2035, according to the bipartisan Committee for a Responsible Federal Budget. And no taxes on tips would reduce federal revenues by between $150 billion and $250 billion over 10 years, according to CRFB estimates.
Trump has previously said his tariffs would pay for his tax cuts. The CRFB has estimated that a 10% across-the-board tariff would raise $2.5 trillion over 10 years, while a 60% tariff on Chinese goods would, on its face, generate $2.4 trillion, but over time, would produce far less revenue or even lose revenue once trade behavior changes due to the massive penalties of trade with China.
Elon Musk to serve in Trump admin: Key highlights from economic speech
Tesla investors already expressed concern CEO Elon Musk’s attention is too divided. However, he may have another task on his hands if former President Donald Trump is elected in November.
“I will create a government efficiency commission tasked with conducting a complete financial and performance audit of the entire federal government and making recommendations for drastic reforms,” Trump said. “Need to do it, can’t go on the way we are now. And Elon, because he’s not very busy, has agreed to head that task force.”
In fact, Trump said the whole thing is Musk’s idea. Musk tweeted that he looks “forward to serving America if the opportunity arises. No pay, no title, no recognition is needed.”
The revelation came during a lengthy policy speech Trump made Thursday, Sept. 5, at the Economic Club of New York. In it, Trump dragged the Biden-Harris economy for inflated prices and immigration and called his opponent a Marxist.
“These are policies to turn the United States into Venezuela on steroids,” Trump said. “Even if for this reason alone, Kamala Harris must be defeated decisively this November.”
When moving on to his own policies, Trump talked about his plans to increase tariffs, make his tax cuts permanent and lower the corporate tax rate from 21% to 15% for companies that manufacture their products in the United States.
While he accused Harris of copying his ideas, like no taxes on tips, the corporate tax rate is an idea where there is a valley between them. Harris has called for raising the corporate tax rate from 21% to 28%.
“My plan will make our tax code more fair while also prioritizing investment and innovation,” Harris said Wednesday, Sept. 4. “So let us be clear, billionaires and big corporations must pay their fair share in taxes.”
“Kamala is also vowing to raise the corporate tax rate from 21% to 28%, we’re bringing it down to 15%, but she really is looking to raise it to 40, 45, or even 50%,” Trump claimed. “You know that; all you have to do is follow her past path.”
In other news on Trump’s economic agenda, he announced a goal that is five times loftier than an executive order from his first term in office.
“My first term, I pledged to cut two old regulations for every one new regulation, and we did much better than that,” Trump said. “I’m pledging today that in my second term, we will eliminate a minimum of 10 old regulations for every one new regulation.”
Whose economic policies are worse for the nation’s debt? Trump’s or Harris’?
If there’s one thing both presidential candidates know, it’s that the economy is the top issue for voters. Both Kamala Harris and Donald Trump want voters to believe they have the optimal economic plan over their opponent.
“He doesn’t actually fight for the middle class. Instead, he fights for himself and his billionaire friends,” Harris said of Trump. “And he will give them another round of tax breaks that will add up to $5 trillion to the national debt.”
“She’s raising taxes. She’s going to give a tax increase of four to five times what people and companies are paying right now. The country will go into a depression if they do it,” Trump said of Harris.
Neither candidate is winning any awards for deficit reduction.
Marc Goldwein, Committee for a Responsible Federal Budget
For months, voters have said they trust Trump more with the economy but Harris is chipping away at that lead. In the latest Reuters/Ipsos poll, 43% of voters preferred Trump’s approach to the economy compared to 40% who preferred Harris’ approach. That 3% point difference is within the margin of error. Just one month ago, Trump had a 12% lead.
Another boost to Harris’ camp is that independent analyses show Trump’s economic proposals will add more to the growing national debt than Harris’. According to the Penn Wharton Budget Model, Harris’ campaign promises would increase deficits by $2 trillion over the next 10 years, while Trump’s promises would add $4.1 trillion in deficits, more than double that of Harris.
However, these analyses do not include revenue changes from both candidates’ proposals not to tax tips and Trump’s comments on widespread tariffs. Penn Wharton notes that key details are missing from Trump’s tariff proposals to calculate the impact and while they could raise trillions of dollars in new revenue, tariffs could also lead to revenue losses from retaliatory actions.
What I’m actually mostly worried about is the commonalities as they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.
Marc Goldwein, Committee for a Responsible Federal Budget
Penn Wharton is not the only independent source calculating the impacts of both Trump’s and Harris’ economic policies. The Committee for a Responsible Federal Budget’s Budget Watch digs into each proposal as it comes in. Straight Arrow News interviewed Marc Goldwein, CRFB’s senior vice president and senior policy director, for its nonpartisan take.
This transcript has been edited for clarity. Watch the full interview in the video above.
Simone Del Rosario: Trump says his policies, like his tax cuts, will pay for themselves through economic growth. But are you also finding that the damage to the nation’s deficits is more under Trump’s proposals than Harris’?
Marc Goldwein: I think it’s too soon to tell who is worse on the debt. Vice President Harris actually has not released most of her agenda yet, and so it’s very premature. And for President Trump, we do have a lot of tax cuts, but we also have things like tariffs that raise revenue.
It’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.
Marc Goldwein, Committee for a Responsible Federal Budget
Simone Del Rosario: That’s a really fair point. Both are trying to vie for this position as more fiscally responsible. But at the end of the day, both plans would add to the nation’s debt, which exceeds $35 trillion today.
Marc Goldwein: Yeah, it’s tremendous. I like to measure debt relative to the economy, and by that measure, we’re at 100%. We’ve only ever been there once in our history and it was right after World War II.
Simone Del Rosario: From what we know of their plans, the economy will grow more under Trump’s policies than Harris’, right?
Marc Goldwein: President Trump supports a lot of policies that are probably pro growth; for example, lowering taxes on Social Security benefits and for businesses and individuals. But he also supports a lot of policies that would shrink economic growth; for example, tariffs. Tariffs are almost universally understood to slow economic growth; and deportation, if by no other reason than you’re literally losing the number of workers.
So I think if you look at Trump’s plan on the whole, it’s not actually clear which direction it goes to. [It’s a] similar situation with Vice President Harris’ plan. We don’t have all the details. In general, the tax increases she’s talked about, I think tend to reduce economic growth, but if she pays for them, that can be a step in the right direction.
Simone Del Rosario: These analyses also assume that either candidate gets their way. Harris, like you said, plans to pay for her spending by raising taxes on corporations and the wealthy. Congress has to agree to that and there’s no guarantee that’s going to happen. How important is that part of her plan to minimize how much the national debt would grow under her spending policies? And what happens if she doesn’t get those tax raises?
Marc Goldwein: It’s really important that both candidates be firm here that they’re not going to support their agenda unless it’s fully paid for, right? Because what happens in the campaign and what happens in Congress is obviously always going to be different. What’s important is that you have that bottom line.
This is what President Obama did. He said, ‘Look, I’m going to negotiate the details of my health care plan, but it’s got to be fully paid for.’ We see similar things from other administrations as well on the left and right. You have to have that bottom line.
Simone Del Rosario: Talk to me specifically about the main differences between these two candidates and their proposals. What groups stand to benefit the most from each candidate’s economic policies?
Marc Goldwein: Well, actually, what’s interesting to me is a lot of the similarities. There’s a tit for tat here where President Trump says no taxes on tips, and so Vice President Harris says, ‘Well, I’m not going to do that either.’ The Democrats say a $3,000 child tax credit, so vice presidential candidate [JD] Vance says, ‘Maybe it’s $6,000 $5,000.’ So Democrats come back and say $6,000.
What I’m actually mostly worried about is the commonalities as they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.
Simone Del Rosario: But both parties say no-taxation-on-tips is a policy they want to move forward with. It sounds great to get people to vote for you, but that’s not a good policy when it comes to the budget, right?
Marc Goldwein: Yeah, I’ve yet to meet an economist that thinks we should have a lower tax rate for somebody that’s a waitress making $15 an hour versus somebody working at McDonald’s making $15 an hour. So I’m not sure this is the right kind of policy.
That’s what we see during campaign seasons: a lot of policies that maybe don’t make sense in the real world because they’re trying to buy votes. And that’s again, why fiscal responsibility is so important, because if you have to tell the voters, ‘Sure, you get this, but in exchange, you’re going to get less of this, you’ve got to pay more on that,’ that allows people to weigh the trade-offs appropriately.
Simone Del Rosario: What is your advice for voters as they’re trying to educate themselves on these different economic proposals to decide their vote?
Marc Goldwein: I would say, if something seems too good to be true, it probably is. It’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.
US trade officials tried to block formula imports during shortage: Report
When the U.S. grappled with a nationwide baby formula shortage in 2022, the Biden administration looked for solutions, but a new report from ProPublica shows one government agency made the process more difficult. One of the options for easing the shortage was to lift steep tariffs on baby formula imported from other countries.
The Biden administration’s lawyers had drawn up a proclamation to get rid of the import tax, but the Office of the United States Trade Representative said no.
Eventually, Congress ended up temporarily suspending the tariffs anyway. However, the new report shows it took too long.
When arguing against suspending the tariffs, the USTR’s office cited concerns doing so would bring “lots of questions from domestic dairy producers.” That’s because cow’s milk is a primary ingredient for most baby formula and the dairy industry has long supported protections for U.S. manufacturers.
The USTR also said the shortage was caused more by a combination of transportation and shipping issues and people panic buying than an actual lack of production.
However, ProPublica details how the shortage’s main driver was Abbott Nutrition — one of the biggest U.S. formula makers — shutting down its largest plant and issuing several recalls over bacterial contamination in its products.
By the time Congress suspended the import taxes, 74% of the normally available baby formula in the U.S. was out of stock. In fact, the report found suspending those tariffs and importing formula helped ease the shortage significantly.
Now, the researchers behind that report are recommending Congress create a “trigger rule” that would automatically suspend import taxes if the market is substantially disrupted again.
A spokesperson with the USTR defended the decision to push back against suspending tariffs, telling ProPublica it was “committed to using all tools – including trade tools – to address the formula shortage and ensure American families were able to access infant formula,” and said “any implication that USTR stood in the way of addressing the crisis is completely false.”