On CNBC's Squawk Box, economist Jason Furman explains why Kamala Harris would be safer for the economy than Trump
Furman highlights the dangers of Trump's universal 20% tariffs proposal and shuts down co-host Joe Kernen's defenses of it: “A global trade war in the making”
Published
Citation From the September 20, 2024, edition of CNBC's Squawk Box
BECKY QUICK (CO-HOST): What do you like the most about — why do you say Harris is the safer plan?
JASON FURMAN (HARVARD UNIVERSITY ECONOMIST): Look, there’s three big ones for me. And it’s the question of what you want to do and what you're able to do. First, trade, this administration did a bit more tariffs than I would have liked, although there was some theory and argument for them. Ten or 20% across the board tariffs, tariffs on allies like Australia, tariffs on products like ball point pens that we don't make. That's just a global trade war in the making. It’s something Donald Trump could do all on his own without Congress. So, that's number one.
Number two, on the budget, I don't think anyone is taking it as seriously as they should. But pretty much every independent rack up of the two says Donald Trump would add much more to the deficit, I a total of more than $5 trillion from him. And from Harris, depending on what she does, either some deficit reduction or a trillion and a half of increase. And, by the way, if he's elected, he will probably have a Republican Congress and could get it done.
Finally, there’s the Fed, his threats to the Fed are just awful. I don't think he could pull them off, but I’d rather not take the chance.
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JOE KERNEN (CO-HOST): John Paulson … he makes an interesting case for targeted tariffs and Biden did leave some on. And you're right, ball point pens, I don't know about that, but like the defense industry. In general, we average about 2% on imported industrial — a tariff of 2% and it’s just much higher from everyone else. We are definitely —
FURMAN: Not everyone else, most of the advanced economies have pretty similar tariffs with us. These are our close allies. We're going to put a 20% tariff on Australia?
KERNEN: I don’t know about 20. How would — in 2022, we had a record for the trade deficit, $1.2 trillion. And then we had a one month record just in July of $103 billion. There is a — there is a problem.
FURMAN: Joe, but tariffs won't do anything about it. First of all, we'll do tariffs on them, they'll do tariffs on us, plus the exchange will adjust. Statistically there is no relationship whatsoever between the level of tariffs and the trade deficit. What tariffs affect is the volume of trade. So we'll end up with less imports, which hurts our consumers, and we'll end up with less exports, which hurts our workers in those industries. So, it just shrinks all of this trade, isn't going to rebalance it.