Tariffs imposed by U.S. President Donald Trump on Mexico, Canada and China will result in a "lose-lose" trade war, said Thomas Sampson, associate professor of economics at the London School of Economics, on Sunday (February 2). - REUTERS
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00:00I think it's fair to say that this is a lose-lose trade war.
00:03Both U.S. consumers and also Canadian and Mexican households stand to lose.
00:09The Tax Policy Center has just put out an analysis suggesting that after-tax U.S. household
00:15income could fall by one percent as a result of these tariffs.
00:19That's a cost of about $1,000 to the average U.S. household.
00:22Say if I'm a U.S. household that imports or consumes Canadian maple syrup, that maple
00:30syrup is going to become more expensive, and that's a direct price increase that households
00:35will face.
00:36But also, if I buy goods that are domestically produced in the U.S. but that are produced
00:41using inputs from Canada, the price of those goods is also going to go up.
00:46So for households, there's many different ways you can be exposed, but all these effects
00:51lead to higher prices.
00:53One possibility is that the higher tariffs are here to stay.
00:58The more hopeful possibility will be that governments realize the costs that these tariffs
01:04may impose and try to reach a negotiated solution to remove the tariffs.
01:10So I think the Canadian and Mexican governments will be trying to talk with their U.S. counterparts
01:17and work out kind of what kind of a deal could we reach that would allow both sides
01:22to remove the tariffs.