When the next recession hits, whoever is president will face intense pressure to cut tariffs, so don’t rely on them for revenue, top economist says

The average effective tariff rate is now 20.2 %, which is the highest since 1911, according to Yale’s budget laboratory. Based on the tariff for the revenues it generates so far, it should bring about 300 billion dollars annually.

Although this is not enough to eliminate the federal budget deficit, which is expected to accommodate approximately $ 2 trillion this year, it is still a meaningful amount. So why don’t you rely on them as a long -term revenue source?

In the last Wednesday episode of Confronting the future Moody’s chief economist, Mark Zandy, a non -partisan group that focused on limiting the national debt, indicated the imposition of a non -partisan group focusing on reducing the national debt, and the chief economist in Moody Mark Zandi referred to the imposition of a tariff through an executive order and can be changed in a moment.

In addition, the so -called mutual definitions face the court’s challenges on the argument that has not been covered under the Economic Forces law on International Emergency.

As a result, Zandy warned against making other tax decisions and spending based on the assumption that these definitions will remain valid. If the economy goes south, all bets are suspended.

He added: “I think that the next time the economy enters the recession – this will not wander, but at some point he will do so – any of its boss will be subjected to great pressure to reduce this customs tariff because they can do this under an executive order. They do not need to go to congress to obtain legislation.”

The contraction may come sooner, not later. Earlier this month, Zandy warned that the economy is on the brink of recession.

On Sunday, he continued, saying that the United States is not in a stagnation now, more than half of the 400 industries that have been tracked in government data are already falling on workers, a phenomenon accompanied by the previous shrinkage.

At the same time, most of the costs of definitions are transferred to consumers, which means that these import taxes are effective sales taxes. According to Goldman Sachs, about 67 % of the tariff costs are transferred to consumers.

“There will be a strong incentive on the part of that president to say,” Well, I will reduce taxes, “Zandy told the Caroline Bordeaux alliance and Robert Pixby.

While Trump has put forward the idea of using customs tariff revenues to provide a kind of profit or discount for Americans, the White House insists that consumers do not have the costs of customs tariffs and that foreign exporters.

In both cases, Zandy said he believed that it is unlikely to generate $ 300 billion annually over the next decade and warned against relying on and plots like this.

He added: “In fact, if I do that, we put ourselves in a more clear and darker financial position on the road, because I do not think that these definitions will take about 10 years from now.”

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