Trump's tariffs turn US into 'scary place to invest,' economist says
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Trump's tariffs, which are targetting key trade partners, could take the United States toward stagflation, according to Nobel prize winner economist Joseph Stiglitz.
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President Donald Trump speaks to reporters after landing at Palm Beach International Airport in West Palm Beach, Fla ., Sunday, Feb. 16, 2025 (AP)
US President Donald Trump's tariff war against the war has made the US a "scary place to invest," possibly triggering the "worst" scenario, stagflation, according to Nobel prize-winner economist Joseph Stiglitz.
In an interview for The Guardian, Stiglitz argued that despite optimism around the US economy, Trump's tariffs and aversion to the Rule of Law make investors averse to investing in the United States, warning that this "risks the worst of all possible worlds: a kind of stagflation."
"If you’re a corporate in the US or in Europe, do you think you have a global market, or do you have just a European market? Where do you locate your factories?"
He also highlighted the role Elon Musk's Department of Government Efficiency plays through slashing government departments without congressional authorization, as well as Trump's lack of respect for contracts, among which is the trade pact he struck with Canada and Mexico in his first term.
"The government has a huge number of contracts and we’re just tearing them up. How much risk do you want? The US has become, I would say, a scary place to invest," he asserted, adding, "I could certainly see a scenario where we get to stagflation – we get inflation and a weak economy."
Trump stirs trouble with tariffs
Trump's tariffs are intensifying tensions with several countries, including key partners like Mexico and Canada, in a bid to revive the United States economy which has been grappling with inflation and high prices.
Trump set a 25% levy on most exports from Canada and Mexico, justifying it by pinning the blame on the two countries for the US' fentanyl problem, an extremely potent opioid that is becoming an epidemic in several states. The levy was paused on February 3 after talks between Canadian PM Trudeau and Trump.
The US president also imposed an additional 10% tariff on Chinese goods, to which Beijing immediately responded by imposing a 15% tariff on US coal and liquefied natural gas, as well as a 10% tariff on crude oil, agricultural machinery, and certain cars.
China is also planning to sue the United States at the World Trade Organization (WTO), considering the tariff hike a serious violation of WTO regulations.
Trump also imposed a 25% tariff on steel and aluminum, triggering strong reactions from the European Union, which promised retaliatory measures to Trump's decisions, with European Commission President Ursula Von der Leyen saying, "Unjustified tariffs on the EU will not go unanswered - they will trigger firm and proportionate countermeasures. The EU will act to safeguard its interests."
The president's trade advisors are finalizing their plans for reciprocal tariffs, which Trump announced on Thursday without disclosing any more details, but the tariffs are expected to aim at any countries that impose duties on US imports.
