Tariff troubles: Will consumers feel the pinch?

Whether the tension between President Trump and China is an all-out trade war or just political sparring, much of the country is behind the president’s call for trade reform.

“To Trump, it appears, the choices are starkly clear: as the most powerful nation in the world today, the U.S. can either wait for death with a thousand cuts, or court death with a fighting chance of renewal,” says Z. John Zhang, Wharton marketing professor and director of the Penn Wharton China Center. U.S. consumers are active players in the economy, which is bracing for an economic downturn in jobs, wages, and the overall financial forecast. Despite Trump’s praise of tariffs as an easy way to win trade wars, the outcome is far from clear.

The U.S. is currently in retaliatory trade moves with China, while making NAFTA a potential target for reform. Zhang and his colleagues at Wharton share their predictions for the effects tariffs will have on the economy. Despite the current tension, says Zhang, “there is no sign that the U.S. economy is about to contract due to the onset or threat of trade wars.”

Read more at Knowledge@Wharton.