SAN DIEGO (KGTV) – Talking about and understanding what comes next with tariffs is hard.
There are lots of predictions, but only time will tell what happens.
President Donald Trump has said in the past the end game is to cut into the U.S.' trade deficit.
"Reciprocal, that means they do it to us and we do it to them. Very simple. Can't get any simpler than that,” Trump said on Wednesday.
Now, the campaign promise becoming an administration's reality.
The President’s tariffs became official on Wednesday.
"The idea seems to be that if we make importing more expensive, we get fewer of them, and we keep exporting what we used to export. And therefore the trade imbalance would shrink,” Dr. Marc Muendler from UC San Diego said.
Muendler is the chair of the economics department at UC San Diego.
He's an expert on international trade and finance.
"The difference of income that we don't generate here but we need foreigners to basically give us a credit for would be small,” Muendler said.
Last month's U.S. Bureau of Economic Analysis data shows the nation’s trade deficit was more than $131 billion in January, up more than $33 billion from December.
Given his expertise, ABC 10News asked Muendler what the end game would look like for us as consumers if the tariffs did work and cut into the U.S. trade deficit.
"The caveat in all of this is that the trade deficit reflects basically the decision of how much of our income we use for our own investment purposes here,” Muendler said.
Again, only time will tell.
"If it is true that we do a tax rebate and then 94 percent of goes into more savings or repaying old debt indeed the trade balance would improve. And all these long ifs and ifs and ifs and many that's what the tariff policymakers have in mind,” Muendler said.
