U.S. markets recently faced steep declines due to retaliatory tariffs from China, Mexico, and Canada in response to President Trump's policies. Concerns are rising about the potential for a prolonged trade war to lead the country into a recession, compounded by the lowest consumer sentiment index since late 2022. In an interview, economist Jeffrey Frankel discusses the impact of tariffs, highlighting rare exceptions where they might be justified, such as supporting infant industries or generating revenue in developing nations, while acknowledging broad opposition to tariff policies among economists.
A prolonged trade war is feared to push the U.S. economy into recession, with significant concern given the recent heavy losses in U.S. markets.
Economist Jeffrey Frankel argues there are rare circumstances where tariffs might be justified, such as infant industries or revenue generation in poorer countries.
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