Vice chairman of IBM Gary Cohnwho was an economic adviser to former President Trump from 2017 to 2018 and is the director of the National Economic Council, said on Sunday that tariffs such as the plan proposed by the former president could lead to inflation if the approach is not “methodical.”
Economy remains a major issue for voters as the November 5 presidential election approaches. The issue also held a front row seat in the September 10 presidential debate as both Trump and Vice President Kamala Harris laid out plans for the economy. Harris said he would offer greater tax benefits to families, but would offset the costs by increasing corporate taxes, while Trump said he would extend tax cuts passed in 2017.
Trump’s proposed economic plan also includes blanket tariffs on all imports into the United States, including a 60% tariff on imports from China and a 10% tariff on imports from other countries. The former president doubled down on the proposal last week during a presidential debate.
“Other countries will, finally, after 75 years, pay back for everything they have done for the world,” he said.
CBS News
Republican vice presidential candidate Sen. JD Vance also spoke to Trump’s tariff plan Sunday in Before the Nation.
“We want American workers to get tax breaks under President Trump’s policies, and we want to punish companies that send jobs overseas through tariffs,” Vance said. “We should not allow slave labor to benefit from the American market. If you want access to our market, you must pay our workers equal wages.”
On paper, the proposed rate hike could cover the cost of the tax cuts, which are a cornerstone of Trump’s campaign promise to end the “inflationary nightmare.” But some experts have warned that Trump’s economic policies could halt, or even reverse, progress. equal record that tariffs effectively act as a consumption tax, increasing the cost of imported goods to the US which consumers usually feel the weight on their receipts.
Cohn said on Sunday that he found it “quite reasonable” for the US government to impose tariffs on Chinese imports of products that are also produced in the US, such as electric vehicles, which The Biden administration announced the plan in May. But he also noted that he doesn’t see the value of tariffs on imports of products that aren’t manufactured in the US.
“We import a lot of products that are not produced in this country. These products are in high demand, and we need them. A lot of them are pharmaceuticals, a lot of other products that we want to have on the shelves when we go into the store. ,” said Cohn. “If we start tariffs on these products, we will have inflation. Until we want to produce these products in this country, we have to start in a methodical way to do it.”
Trump’s former adviser then mentioned CHIPS and the Science Act is a competitive approach that “does enough.” The CHIPS Act funds domestic semiconductor production, and was developed by the Trump administration before being signed into law by President Biden in 2023.
“So we can build the chips here, and then we can be independent in chip manufacturing,” Cohn said. “Then we can rate foreign chips from flooding our market at discounted prices, but until we have the capacity to build our own, put a tariff on chips that will only debilitate our economy.”
While the two presidential candidates continue to campaign on the economic agenda, the Federal Reserve of the United States this week expected to announce interest rates for the first time in more than four years starting in 2020.
Economists told CBS News that Trump’s plan for tax cuts would be an inflationary fiscal stimulus and that plans to deport immigrants could force employers to pay higher wages. In that case, the Fed could be forced to maintain the benchmark rate longer.
If consumers are “sad now, they’ll be surprised a year from now” about inflation if Trump wins and implements policies, Mark Zandi, chief economist at Moody’s Analytics and co-author of a June report on the macroeconomic impact of either Trump or Biden winning in November, told CBS News .
