MPR features St. Olaf expert on tariffs
Stocks dropped sharply after President Donald Trump announced sweeping tariffs, including a 10 percent tax on all imports starting April 5. Higher tariffs have followed, including 145 percent on Chinese goods, prompting retaliation from other countries — 125 percent from China and 20 percent from the European Union. These tensions have unsettled global markets, with U.S. stocks falling.
St. Olaf College Associate Professor of Economics and Department Chair Allison Luedtke expressed concern about the announcement in an April 3 interview on MPR’s Minnesota Now, as news about new tariffs was just beginning to emerge. “It doesn’t seem good,” Luedtke told MPR listeners. “I would not say that I feel good about any increase in tariffs, much less such a sweeping increase in tariffs across all of the globe.”
Luedtke explained that tariffs function as taxes on imports, but their exact impact is unclear. “We don’t know how they will end up impacting the economy,” she said. “What I think is much more likely […] is that they will pass these increases in prices onto the consumers.”
She pointed out the lack of support from economists. “I haven’t found an economist who thinks it’s a good idea yet,” she noted. “Some people think it will be catastrophic … but I have yet to find an economist that said, ‘Yeah, this is the move.'”
When asked about the effect on Minnesota, Luetdke said that every single industry will be affected. “Medical devices have some of the most complicated supply chains,” she said, noting that it is one of the state’s major sectors.
On whether consumers should stock up on certain goods or items, she said, “We’re not very good at predicting what things will be hit first,” and advised people to “hang tight” and build savings if possible.
She also questioned the logic behind eliminating trade deficits. “I’m in a trade deficit with Sephora,” she said. “They make a product that I want, and they will take my money for it.”
“Trade creates value,” she said. “If it didn’t, we wouldn’t do it.”