PORTSMOUTH, UNITED KINGDOM – OCTOBER 28: The container ship Vung Tau Express sails loaded with shipping containers close to the English coast on October 28, 2024 in Portsmouth, England.
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Tariffs proposed by U.S. President Donald Trump are not simply symbolic, but are punitive and will “cost jobs” in the U.S., according to Frank Lavin, former U.S. ambassador to Singapore.
Speaking to CNBC’s “Street Signs Asia,” Lavin said that “we’re in for a bit of bad news in the near term,” adding that the tariffs will also hurt the auto industry in the U.S.
“It will obligate other countries to respond. So we’re going to see deterioration, and I think worst of all, from Mr. Trump’s point of view, is we’re going to see a little bit of inflationary pressure as well,” Lavin said.
Trump on Monday signed executive orders implementing 25% tariffs on imports of steel and aluminum into the U.S.
When asked if Trump could be using tariffs and the threat of tariffs as a bargaining chip, Lavin explained that it could be seen as such, if tariffs were targeted at Canada or Mexico to elicit a response on issues like border security.
“But when you’re talking about a global tariff on steel and aluminum and a tariff on China, you’re not going to see a quick response and a quick resolution of these matters,” he said.
Furthermore, with Trump vowing a “reciprocal” stance on tariffs, Lavin said that the world will see a deterioration in trade, and this will make it difficult for other countries to respond. “So he’s gone beyond simply signaling or simply establishing tariffs as a bargaining chip.”
“If they charge us, we charge them. If they’re at 25 [percent] we’re at 25, if they’re at 10 we’re at 10, And if they’re much higher than 25, than that’s where we are at too,” Trump said Monday.
While the U.S. economy is currently “not in a bad shape,” Lavin said that tariffs will add inefficiencies to the economy and put negative pressure on it. It will also increase inflationary pressure, which could lead to the U.S. Federal Reserve holding off on rate cuts.
“Trump was angry at the U.S. Fed last time when there was no easing. Well, there’s not going to be any easing next time either, if he keeps these tariffs in place,” he said.