The recent agreement between the U.S. and China to pause tariffs has encouraged American businesses to import stalled goods from China, following a significant reduction in tariffs. The deal lowers U.S. tariffs from 145% to 30%, with China reducing its own tariffs from 125% to 10%. While stocks surged in response, economists warn that uncertainty continues to cloud the economic outlook, potentially leading to stagflation. Expert Diane Swonk explains the significant lag in goods reaching U.S. markets and warns of the consequences of stop-go trade policies, reminiscent of pandemic supply chain issues.
Everyone all of a sudden slows down to a crawl to try to creep across the stoplight, not knowing which person's supposed to go next.
These sort of stop-go programs are the things that can make for very big policy mistakes, especially when considering inflation and how it impacts the U.S. economy.
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