The Trump Administration is implementing new tariffs on Canada, Mexico and China.  To help explain what this will mean in the short term for Central Minnesota residents I was joined on WJON by St. Cloud State economist King Banaian.  President Trump has since suspended the tariffs on Mexico for a month.

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Banaian believes prices on goods and services will go up following these tariffs.  He expects inflation to go up about .5% for the year overall.  Banaian believes the GDP will fall approximately .25%.  He says Canadian lumber could be used to help rebuild southern California after the fires there.  Banaian expects those prices to go up.  He believes the White House theory is U.S. consumers will substitute buying U.S. products rather than the foreign produced products with new tariffs.  Banaian doesn't believe the U.S. products will stay constant in price. He expects the U.S. products to raise their price in response to the foreign products but maybe not as high.  Banaian says either way the consumer will be paying more.

Banaian says during the first Trump Administration he put tariffs on washers and dryers from Korea.  Both the foreign made products and U.S. products went up in price.  Banaian explains that when a U.S. business sees the price go up on their competitor's products they are likely to raise their price to increase their profit margin.

Banaian says a possible benefit to these tariffs is this money could be used to help reduce the United States budget deficit or the money could be used as partial payment to extend tax cuts.  He says over a 10 year period the United States will bring in $125 to $130 Billion dollars a year.  Banaian says the money could also be used to pay for additional Federal programs.

If you'd like to listen to my conversation with King Banaian, it is available below.

 

 

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