Proposed tariffs likely won't have desired effect, say Emory experts
March 9, 2018
Vivian Zhanwei Yue, an Emory economics professor with a joint appointment to the Federal Reserve in Atlanta, says the proposed tariff is unlikely to have a significant effect on one of the key countries being targeted — China. Instead, Canada will be directly affected if no exemption is applied. In addition, China mainly exports its steel to the Asian countries, Yue says.
The overcapacity of steel production is a global phenomenon, says Yue, and a unilateral tariff policy is unlikely to solve this fundamental problem. Tariffs on steel and aluminum can protect the steel aluminum sectors temporarily, but imposing tariffs would increase the cost of producing cars, machineries and other metal products, therefore hurting the other sectors and the consumers at large, Yue says.
Kaiji Chen, an Emory economics professor who studies the Chinese economy, says his research indicates the tariff will have little impact on China.
Last year China's GDP growth (6.9%) benefited largely from its real estate and infrastructure, says Chen. He believes the direct impact of tariff on China's GDP growth would be small. He says he is more concerned is the ripple effects of increasing tariff on China and the rest of the world.
Ray Hill, who teaches economics and finance at Emory’s Goizueta Business School, says that, depending on the outcomes, the Trump administration’s tariffs on steel and aluminum may not last.
Hill says tariffs imposed during George W. Bush’s administration didn't create jobs, profits from steel companies went up (rather than wages), and other industries hurt by the move pushed back, which led to the tariffs being repealed within a year.
History could repeat itself: if the current tariffs don’t have the desired outcome, they could eventually disappear, Hill says.