MORGANTOWN, W.Va. — As the self-imposed tariff deadline approaches, markets are hoping for more predictable times ahead.
John Deskins
WVU Director of the Bureau of Business and Economic Research John Deskins said he believes deals will get done because of the size and opportunity the United States economy offers. The American consumer base numbers about 330 million people, many with some of the highest incomes in the world.
“The United States accounts for about 25 percent of all economic output in the entire world even though we’re only four or five percent of the world population,” Deskins said Thursday on MetroNews “Talkline.” “So, these countries need to have access to the United States market.”
Despite the recent strong announcement of a three percent increase in the gross domestic product, inflation remains a concern. Deskins said the inflation rate is still closer to three percent than to the Federal Reserve’s target of two percent.
“We’re still waiting to see what happens to numbers over the next few months and we’re still waiting to get final certainty around tariffs so things aren’t as bad as we thought but we are seeing mixed signals and things are still wait and see.”
Earlier this year, economists and pundits predicted a crashing economy due to Trump’s trade policies. The high tariff rates suggested at the time created uncertainty, leading to dire projections — projections that ultimately did not come to pass in the latest quarterly report.
“Now it seems like 15 percent or somewhere between 15 or 20 percent tariffs is going to be the norm coming from Trump and that’s not nearly as scary as what we were thinking back in April,” Deskins said.
Many are celebrating the recent 3 percent GDP growth in the second quarter, but concerns remain. According to Deskins, the increase was largely due to a 30% drop in imports, which followed a surge in the first quarter when businesses stockpiled goods ahead of expected tariffs.
“That’s what I’m talking about when I say wait and see and that’s what I’m talking about when we say we really have to look at that inflation report,” Deskins said. “Because as soon as those stockpiles are gone then we’re going to see the effect of these 15 to 20 percent tariffs on imported goods.”
Deskins called the idea “absurd” when asked about the possibility of tariff rebate checks for American taxpayers. He noted that the national debt has reached $37 trillion and continues to grow. This year alone, the federal government is expected to spend $1 trillion more than it collects in revenue, making a rebate program highly unlikely.
“We owe people $30 trillion in money that’s floating around in the form U.S. Bonds that are all across the world,” Deskins said. “So, the notion of rebating that money when we have a deficit of over a trillion- that’s utterly nonsense.”