Over the last year, Donald Trump announced double and triple-digit tariff increases on almost all imports across the board, unleashing a global trade war that has been rolled out so chaotically that in April 2025, Trump slapped tariffs on the uninhabited Heard Island and McDonald Islands. Ali Velshi welcomes to the show former International Monetary Fund Deputy Director Mohamed El-Erian to discuss the impact these haphazard tariff policies are having on the world’s economy.
Our trading partners have attempted to negotiate rates changing on a whim and mitigate damage to their own economies. Tariffs against China resulted in their exports to the United States dropping by a fifth, and a steep drop in soybean imports from the U.S. that put our own farmers in jeopardy. after tariffs on auto parts that Canada sees as a violation of our trade agreements, their Prime Minister stated that Canada’s “old relationship” with America is now over.
As the market reacted negatively to tariff policies, Trump then changed those policies. This has resulted in economic uncertainty around the world and the weakest growth since 2008.
El-Erian explains what may or may not happen next: “The trading system needs a certain amount of predictability to function.” He also warns that, while many importers and exporters have held back on passing more costs on to the consumer for the time being, as uncertainty increases and tariffs continue, companies are going to make the predictable and expected decision to raise prices even more to offset losses.
LISTEN: VELSHI TALKS TARIFFS AND INFLATION
WATCH: ALI VELSHI AND EL-ERIAN ON THE IMPACT OF TARIFFS
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