Maxwell School News and Commentary

"We’re seeing the slowdown hit the Midwest, the farm belt," says Mary Lovely, professor of economics. "And a big slowdown in business investment, capital equipment purchases, is hitting states like Pennsylvania and Illinois." 

"Higher taxes on these goods are likely to be highly regressive, in that lower and middle class Americans spend a higher portion of their income on these Chinese imports than do higher income Americans," says Mary Lovely, professor of economics.

"I think that if President Trump goes through and raises these tariffs and then China retaliates, there will be a lot more pain and no gain," says Professor of Economics Mary Lovely.

"The economy has changed a lot since 1888 and in particular, when we think about who bears the burden of tariffs, we have to recognize the development of very complex supply chains for American companies," says Professor of Economics Mary Lovely. 

"Trade policy does have an impact because it raised costs significantly for steel and aluminum, and the industry told Trump it would do that," says Mary Lovely, professor of economics. "They already weren’t able to sell enough vehicles to keep these lines productive and raising costs by a billion dollars? It doesn’t help."

"Trade policy has very little direct impact on the overall trade deficit in the longer run," said Mary Lovely, professor of economics.

Professor of Economics Mary Lovely says negotiators should seek specific policy changes that will address the reason for these tariffs in the first place—U.S. allegations that China treats American firms unfairly with respect to their technology and intellectual property.

"We’ve never seen anything like this," Mary Lovely told the Associated Press. Lovely recently spoke with multiple news outlets about the trade war between the U.S. and China.  

These new tariffs will “almost surely not” cause a recession, says Mary Lovely, professor of economics. “This industry is important but it’s not that important. Costs will rise. We’ll see some job dislocation…but we will not see a recession,” she adds.