IU Professor Doubtful About President Trump’s New Tariffs

Source: WISH-TV / WISH-TV

INDIANAPOLIS (WISH) — President Donald Trump is poised to put pen to more new tariffs Thursday, but at least one economic expert in Indiana claims there is virtually no way they will work as intended.  

“I’m very skeptical how this will play out,” said Andreas Hauskrecht, a business economics professor at IU’s Kelley School of Business. “Not in a positive way for the U.S. economy, not for the U.S. consumer, and certainly not for the U.S. producer.”  

Hauskrecht delivered his analysis of the Trump tariff plan during a conversation on WISH-TV’s Daybreak.  

“We will see higher food prices. We will see other prices that will go up. Steel in particular…will affect all of us, buying a car, buying a washing machine. So what we will see is basically that the American consumer will pay higher prices for imported goods.”  

The newly-released Consumer Price Index report shows that a cooling in prices has ended, and inflation is again accelerating in America.  

Hauskrecht, who has a doctorate in economics, contends the numbers make Trump’s call for the Federal Reserve to further lower interest rates a non-starter.  

“We can actually estimate that and the probability that the Fed will decrease interest rates in its next meeting in middle of March stands at the moment at 4%,” he explained. “So, 96% of the market says the Fed has no way to do so and they will push down further decreases of interest rates. What we all anticipate is that the current tariffs will increase prices and make it basically impossible for the Fed to decrease interest rates, what would be needed so much, but the Fed has no option here.”  

When asked whether the president is using the tariffs as more of a bargaining chip or a long-term revenue generator, Hauskrecht sees the latter as “impossible.”  

“Even when there would be a 25% tariff on everything we import from Canada, from Mexico, and high tariff on China’s goods to us, this would maybe produce 5% of government, federal government expenditures in a year,” he said.  

“So, the idea that we can reduce the income tax because now tariffs will pay for that, that’s a bogus idea.”