Harvard economist: Tariffs won't reduce trade deficit

CGTN Published: 2018-08-16 17:56:01
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The trade war launched by the Trump administration could ultimately harm the US, Richard Cooper, professor of international economics at Harvard University told CGTN in an interview.

President Donald Trump claimed that the reasons behind declaring a trade war with China were to reduce the trade deficit and save manufacturing jobs, but Cooper said a tariff war cannot solve those problems.

“A tariff war cannot reduce the trade deficit and save jobs for manufacturing.” 

“This smokeless war is designed to get more foreign investment in the US and for American firms to come back to the US, if he succeeds in both of those, I’m not sure he will, the US overall deficit will go up, not down,” he said.

Cooper generally held a negative attitude towards the tariff war and pointed out explicitly that Trump has attempted to reduce bilateral surplus conflicts with other policies, yet it cannot be denied the tariff imposed has, in a way, restricted foreign investments in the United States. 

Concerning the employment issues in the manufacturing sector, Cooper signified the improvement of technology, in practical terms, hurts the employment rate. 

“US manufacturing is not in decline, jobs are in decline, like agriculture before.” 

Cooper noted although Trump had made a trade deal with the EU and said he is in favor of free trade, he had not linked the tariff increases to the outcome of free trade.

“It is not conveyed by the public at large,” Cooper said, and stated that the pursuit of free trade needs serious negotiation.

When it comes to the impacts that the tariff war may bring, he added it had created an unpleasant uncertainty which made the businessmen more cautious about where they invest, and the US companies that have always been eager to invest in China are deeply disappointed and annoyed by what is happening.

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