High tariffs and the resulting trade war "tend to be bad for the global economy," said a leading economist. "This is likely to lead to a drift towards recession and downturn rather than economic growth," he said.
LONDON, March 23 (Xinhua) -- High tariffs and the resulting trade tensions could harm the global economy, pushing it toward recession rather than growth, a leading economist has warned.
While tariffs can boost government revenue by acting as a form of sales tax on imports, they also drive up the cost of imported goods, fueling inflation as consumers turn to potentially pricier domestic alternatives, said Iain Begg, an economist at the London School of Economics and Political Science.
Tariffs also disrupt global trade by shifting production from more efficient international suppliers to less efficient local producers, further straining economic growth, he told Xinhua.
High tariffs and the resulting trade war "tend to be bad for the global economy," said the economist. "This is likely to lead to a drift towards recession and downturn rather than economic growth," he said.
Moreover, tariffs can severely disrupt global supply chains, especially for industries reliant on cross-border components, such as U.S. automakers which depend on Canadian parts, he said.
The U.S. administration has used tariffs in two distinct ways, Begg explained. One is as a political tool, linking tariff decisions to issues such as immigration and fentanyl-related drug flows, as seen in dealings with Mexico and Canada. The other is as an economic weapon, based on Trump's belief that tariffs protect American jobs and encourage domestic consumption, an approach widely disputed by most economists.
While tariffs have been used by many U.S. leaders and other global leaders, Begg said, the concern lies in "the magnitude of those (U.S. President Donald Trump's) tariffs and the ambiguity about the purpose that they're being deployed for." ■