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cover of episode Tariffs & Q2 Growth Shock | Trade Maven Brad Setser on Trump’s Tariff Warpath, China’s Balance of Payments, and “Self-Induced Recession” Probabilities

Tariffs & Q2 Growth Shock | Trade Maven Brad Setser on Trump’s Tariff Warpath, China’s Balance of Payments, and “Self-Induced Recession” Probabilities

2025/3/26
logo of podcast Monetary Matters with Jack Farley

Monetary Matters with Jack Farley
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This chapter discusses the potential economic impact of the Trump administration's tariffs, focusing on uncertainty, potential magnitude (up to 2% of GDP), and effects on inflation and real GDP growth. Estimates suggest a significant short-term negative impact, potentially leading to a recession.
  • Trump administration's tariffs could reach 2% of US GDP.
  • Significant uncertainty about the actual tariffs.
  • Estimates of inflationary impact are close to the 'just pay it' costs.
  • Short-run impact on the economy is expected to be about half of the 'just pay it' costs.

Shownotes Transcript

Brad Setser is an expert on global trade and capital flows, having served as senior advisor to the United States Trade Representative from 2021 to 2022. The Whitney Shepardson senior fellow at the Council on Foreign Relations (CFR) joins Monetary Matters to explain why he thinks President Trump’s tariffs are likely to cause a growth shock in the second quarter. Recorded on March 20, 2025

Brad Setser piece on China’s Balance of Payments: https://www.cfr.org/blog/iphone-imf-and-chinas-balance-payments)

“The Evolution of Global Trade in 2024”: https://www.cfr.org/blog/evolution-global-trade-2024)

Follow VanEck on Twitter https://x.com/vaneck_us)

Brad Setser on Twitter https://x.com/Brad_Setser)

Brad Setser on CFR: https://www.cfr.org/expert/brad-w-setser)

Follow Jack Farley on Twitter https://x.com/JackFarley96

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