President Trump is enacting tariffs to bring manufacturing and jobs to the US, but there may be a problem with that plan. In the video above, RBC Capital Markets US economist Michael Reid joins Market Domination hosts Julie Hyman and Josh Lipton to explain what that problem is.
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you know, we talk about these tariffs, Michael. And it's important just to always mention what, what's what seems to be Trump's policy goal here, which is to encourage more domestic manufacturing. That is the long term policy goal and objective. As an economist, I'm just curious what you make of that objective and priority.
It's tough in this environment. And by that, I mean, uh, we really start to wonder where's the labor supply going to come from. Uh, we've talked a lot about just demographic forces here in the US. We're in this peak, baby boomer retirement age. The workforce, uh, is, is really being, uh, lowered by retirements. You have workers leaving. You now have immigration, uh, that is slowing. So the availability of workers, um, to find folks who want to work in manufacturing is going to be quite difficult. Uh, the manufacturing sector itself is one of the older, uh, sectors in the US. Uh, and they're located in places where there's generally population decline, uh, notably around the Midwest and the Great Lakes. So, uh, you have to think about, how are you gonna get people to move to places where that manufacturing, uh, is occurring? Uh, and that's a tough spot right now with respect to the housing market and what's going on there, uh, where you have this, you know, effectively a mortgage lock-in rate, um, that's preventing people from moving.
And something else I wanted to ask about is, especially with the tariffs on places like Canada, Canada and Mexico and regarding China as well, there's been some talk of, it won't drive the US into recession, but it could drive Mexico and Canada into recessions. But wouldn't that then be bad for the US since even with the tariffs, they're still huge trading partners?
Absolutely, they are. And, and while they're certainly more reliant on the US for their activity, uh, we're not expecting to see strong growth, uh, in the US, certainly in these types of scenarios. Uh, we had modeled initially, uh, when we estimated 25% tariffs on Mexico and Canada, respectively, uh, that the US would be closer to no growth. So again, not necessarily a recession, but, uh, you're talking about a very squishy environment where, uh, certainly not gonna feel good for businesses nor consumers.