‘Overall, score card is negative’: Gita Gopinath on what US tariffs have accomplished so far

Professor of Economics at Harvard University and former Chief Economist of the International Monetary Fund, Gita Gopinath, assessing the accomplishments of the US’ tariffs on its trading partners gave it a negative score. In the six months since US President Donald Trump announced the tariffs there has been nothing to show for it, she said.

“It is 6 months since "Liberation day" tariffs. What have US tariffs accomplished? 1. Raise revenue for government? Yes. Quite substantially. Borne almost entirely by US firms and passed on some to US consumers. So it has worked like a tax on US firms/consumers. 2. Raise inflation? Yes, by small amounts overall. More substantially for household appliances, furniture, coffee. 3. Improve trade balance? No sign yet of that. 4. Improve US manufacturing? No sign yet of that. Overall, the score card is negative,” she said. 

Trump imposed sweeping tariffs on its trading partners on April 2, with a baseline of 10 per cent, something he termed as ‘Liberation Day’ tariffs, indicating that it would correct decades of asymmetrical foreign tariffs and other barriers that impacted US goods. He believed that only aggressive retaliation can reverse the damage and boost American manufacturing. 

Among the countries, he imposed 25 per cent tariffs on India, and hiked it with another 25 per cent as penalty for purchasing Russian oil. The US also had an escalatory tit-for-tat tariff war with China till both the parties decided to engage in trade talks and hold the tariffs off for 90 days.

He then went on to impose sector-wise tariffs as well. In the most recent – on Monday – Trump announced that all medium- and heavy-duty trucks imported into the United States will face a 25 per cent tariff rate starting November 1. 

Many experts and critics called out Trump’s policies, highlighting that increased tariffs is not the answer. Andrés Velasco, Dean of the School of Public Policy, London School of Economics, said, “No matter what concerns you may have about the impact of trade on jobs in the US, Trump tariffs are not the answer. They are applied for political, not economic reasons. They are volatile, unpredictable and quite likely, both illegal under American law and international law.”

New Jersey Governor Philip D Murphy said, “I am not a big tariff guy in terms of our allies. I understand the objective that the President has and I agree with it. But I just think it is inflationary and it is not something I am a fan of.”

LSE President & Vice Chancellor Larry Kramer said, “In the long run, the effect of the tariffs is going to be more to drive trade out of the US, foster trade agreements among and between other countries, and rely on the US a lot less, which is frankly bad for the US and good for the rest of the world.”