In the News: Mary E. Lovely

According to Mary Lovely, professor of economics, the decline in imports subject to tariffs could also be due to a slowdown in frontloading, or companies rushing orders to avoid duties.

Professor of Economics Mary Lovely argues that Trump’s trade actions "are a prime example of 20th-century tools aimed at the knowledge-embodying trade flows of the 21st century."

"People who shop at Walmart or Target are going to be hit harder than people who buy their toaster ovens from Williams Sonoma or can afford to get products from a higher-income country," says Mary Lovely, professor of economics.

"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."

According to Mary Lovely, professor of economics, the rules around Made in America labeling can be confusing, and companies can violate them without realizing it. "There are rules, and companies—even if they’re trying to abide by them—may find them complicated, so issuing a cease and desist, it might not be unreasonable."

"The president looks at this [foreign tariffs] and says it's coming from foreigners," says Mary Lovely, professor of economics. "That's not technically correct. I mean, I go to Macy's and pay a sales tax. Macy's is the one that sends the check to the government, but that doesn't mean they're the ones that pay the tax. I am."

"So there's a great deal of uncertainty and firms are really in doubt as to what they should do because moving the supply chain is costly. Before you want to do that, you want to make sure that it's something that you really need to do," says Mary Lovely. professor of economics.

"I do think we can see a strategy, but that doesn’t mean it’s a good strategy,” says Mary Lovely, professor of economics. "They’re going to use these bilateral deals to strong-arm countries into lining up behind the U.S. on China. But when we get there, what’s the next step? I don’t know what the endgame is."

"Unfortunately, I believe it may do little to expand employment in the auto sector and will hurt auto buyers," says Mary Lovely, professor of economics. "The new rules raise the cost of production in North America, raise prices for auto buyers, and reduce overall auto and truck sales."

Mary Lovely, professor of economics, says the new U.S. trade deal with Canada is a "clear signal" that the U.S. is "circling the wagons against China."

"They are trying to threaten the Canadians into signing a deal that at this point the Canadians don’t want to sign and there is a gigantic bogeyman in the room which is the 25 percent tariff on Canadian auto imports," says Mary Lovely, professor of economics.

According to Mary Lovely, professor of economics, most of the tariffs that have been imposed have hit U.S. companies, not the Chinese.

"The first few rounds of tariffs hit supply chains really hard," says Mary Lovely, professor of economics. Now, the Trump administration "has begun to hit things clearly not processed in the U.S.—consumer goods—and this is going to get people’s attention."

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

The fellowship is made possible by generous gifts to the Astrid Merget Fund honoring two-time alumna and former associate dean of the Maxwell School Astrid Merget ’68 M.P.A./’73 Ph.D. (SSc).

"What this deal really is signaling is that this administration is going to go forward with a 25% tariff on autos," says Mary Lovely, professor of economics. "That's going to greatly upset our partners in the EU, in Japan."

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.

"The companies that use steel, like aluminum can manufacturers, or companies that make steel vats for pharmaceuticals or the dairy industry, they're going to be hurt by this," says Mary Lovely, professor of economics.

"If jobs and wealth are the metric for 'winning the trade war,' China, not America, will emerge the victor," says Mary Lovely, professor of economics.