Northwestern experts on the economic uncertainty of Trump’s proposed tariffs

EVANSTON, Ill. --- President Donald Trump is expected to proceed with plans to impose tariffs on Mexico and Canada set to go into effect Tuesday, according to U.S. Commerce Secretary Howard Lutnick. Even though there has been much talk, a decision on an exact number — or if it will happen at all — has not been reached.

Northwestern University experts on the economy, professors Nancy Qian and Mark Witte are available to speak with media on the impact uncertainty has on the economy.

“Uncertainty is the biggest problem of Trump tariffs in more ways than one. It is possible for America to win a trade war because being the world’s largest economy gives it a lot of leverage. But uncertainty about what the U.S. wants and how long before U.S. policy changes again is getting in the way,” said Nancy Qian, a professor of economics at Northwestern’s Kellogg School of Management.

Last week, Trump threatened to impose 25% tariffs — which are a tax on imports — on Canada and Mexico, starting March 4. He justified the decision by saying the tariffs are a response to an unacceptable flow of illegal drugs and migrants into the United States.

A 10% tariff was placed on China last month after the Trump administration said that Beijing is not doing enough to stop the flow of fentanyl into the U.S. The new proposed tariffs would cause Chinese exports to the U.S. to face a levy of at least 20%.

“The Trump administration has swerved drastically on decades-long bipartisan U.S. foreign policy such as on Russia, American territorial expansion and developing economies,” Qian said. “This uncertainty complicates negotiations. In the meantime, tariffs and prices for American consumers and producers will keep increasing.”

“This policy uncertainty is terrible for business,” said Mark Witte, professor of instruction and director of undergraduate studies in the economics department at Northwestern.

“Running a business is a matter of balancing risks. Small changes in prices can wipe out what would otherwise be a workable deal, cost a lot of jobs, and leave consumers without the product they wanted. I've talked to friends who rely on imported parts for some of their product, and the proposed tariffs would drive the cost of their product above the price they need to be competitive in their market. They don't know if they will be able to keep their team together or have to lay everyone off and lose all the time and money they have invested in building these relationships and the brand they have created.”

Nancy Qian is the James J. O’Connor Professor of Economics at the Kellogg School of Management. Her research provides evidence for the detailed processes of the root determinants of economic development: geography, demography, human capital, institutions and culture. She is available Monday, Tuesday and Thursday before 2:30 p.m. CT by zoom/phone. To set up an interview with Professor Qian, reach out to Shanice Harris at shanice.harris@northwestern.edu.

Mark Witte is a professor of instruction and director of undergraduate studies in the economics department at Northwestern. His research focuses on applied questions in macroeconomics and public finance. His primary interests are in consumption theory and topics in taxation. He can be reached at mwitte@northwestern.edu or by contacting stephanie.kulke@northwestern.edu.