Tariffs and trade: U-M experts available to discuss
President Trump has said he plans to add tariffs to products made in other countries and imported to the United States, especially those from Mexico and China. University of Michigan experts can discuss this and other policies, including Trump’s stands on international trade agreements such as NAFTA and TPP.
Hoyt Bleakley is an associate professor of economics and research associate professor at the Population Studies Center. He studies economic history, development, labor economics and international macroeconomics.
“The new administration is suggesting a reversal in trade policy of a magnitude that hasn’t been seen in decades, possibly since the 1920s,” he said. “A sudden increase in trade costs is a recipe for a slowdown, maybe a recession, as the higher costs disrupt the supply chain. This wouldn’t matter much if applied to the small trade flows between the U.S. and a random small country, but Mexico is now so heavily integrated into North American manufacturing that a large increase in the cost of cross-border transactions would make many U.S. manufacturers significantly less competitive both at home and abroad.”
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Alan Deardorff, professor of public policy and economics, is an expert on international trade. He developed the Michigan Model of World Production and Trade, which is used to estimate the effects of trade agreements.
“Trump’s blocking of the TPP is unfortunate for the benefits foregone, but won’t in itself be harmful economically,” he said. “But his intent to renegotiate NAFTA could be very harmful if it restores the tariffs and other barriers to trade between the U.S. and Mexico that existed prior to NAFTA. That would destroy, but not replace, the complicated North American supply chains that have grown under NAFTA and sustain much of U.S. manufacturing.
“More likely, I hope, is that he will renegotiate NAFTA to update it but not increase trade barriers, and if so, that would not be harmful. As for his desire to impose a large tariff on imports, perhaps only from China, I think it unlikely that he’ll be able to do that politically. But if he did, it would be devastatingly costly for U.S. industry by itself, and would prompt retaliation by other countries that would raise costs of living everywhere and probably cause a global recession.”
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Linda Lim, professor of strategy at the Ross School of Business, focuses her research on the political economy of multinational and local business in Southeast Asia. That includes the changing international trade and investment environment, and the influence of domestic politics, economic policy and culture on business structure, strategy and operations.
“Trump’s recent comments suggest that he is indeed committed to unilateralism in international relations in general, and trade policy in particular,” she said. “This is a major reversal of the multilateral world order which has (broadly speaking) kept peace and generated prosperity for seven decades. It is difficult to see how the United States, now a much smaller share of the world economy and more dependent on the rest of the world than before, can ‘go its own way’ as Trump signals he intends, without undermining the stability and prosperity of other countries and thus, eventually, its own.”
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Marina Whitman, professor of business administration and public policy, is an expert on international trade and a former chief economist and first female group vice president at General Motors Corp.
“Global trade had started sliding in comparison to global gross domestic product growth, even before Trump was elected and doubled down on his protectionist rhetoric about imposing punitive tariffs and tearing up trade agreements,” she said. “Even if he doesn’t actually initiate all the actions he has been threatening, the very fact that he talks that way is bound to have a further depressing impact.
“Yes, NAFTA could use updating and China has quite a few trade behaviors we can take them to task for, though deliberately weakening their currency is not currently one of them. But what he is proposing is both more drastic and more irrational; it would have a negative effect on both the U.S. economy and those of our trading partners, especially China, Mexico, Canada as well, indeed, on the global economy.”
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Puneet Manchanda, professor of marketing at the Ross School of Business, is an expert on business in emerging markets, business in India, and strategy and marketing issues.
“If the Trump administration follows through on all its campaign promises vis-a-vis trade agreements and policies, the short-term effect on the American consumer is unlikely to be positive,” he said. “The cost of goods and services is likely to go up while the impact on job creation is unlikely to materialize right away.”
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