A Tennessee Tech economics expert said China’s tariff retaliation has brought a lot of uncertainty to the US economy.
Business Dean Dr. Thomas Payne said the volatility in the stock exchange is a result of the policies. Payne said the uncertainty in the economy may hang around until a new trade deal with China is done.
“Hitting back with that 125 percent is another signal that they are willing to go nose-to=nose with us at least for the time being,” Payne said. “As you probably know, China tends to play the long game, and that may be there for awhile.”
Payne said before trade negotiations began, the Federal Reserve in Atlanta had already projected a slight economic downturn in the first quarter of 2025. Payne said so far, tariff retaliations have not helped the economy in the short run.
“That’s a lot of what’s going on here, we have a short run situation, and we have a lot of speculation as to how this will play out in the future,” Payne said. “So as you hear the pundits and the media talk about the tariff situation, that’s really where that conversation is now, will this play out in a way where we have better negotiations, better trade deals, with other countries, China not withstanding, and whether or not these tariffs will stay in place.”
Payne said Trump’s increase in tariffs is a move to get other countries to the table to renegotiate trade deals. Payne said other countries may or may not have different responses than China.
“I think some countries will probably be more motivated and apt to come to the table, others may, as you say, or suggest might hold out a little bit to see how this plays out with other negotiations, so you can see where the political process and that whole negotiation process plays into this but all of it has economic ramifications.”
Payne said further trade negotiations will have a large impact on the world economy. Payne said the United States and other countries both know the trade negotiations can lead to a win-win or lose-lose scenario.
Payne said the average person might see a short-term effect of tariffs at the grocery store with higher prices on imports. Payne said many people are trying to figure out if they should spend or not spend before more tariffs impact the economy.
