President Donald Trump confirms 104% tariffs on imports from China are set to take effect on Wednesday. Cornell University professor and "The Future of Money: How the Digital Revolution is Transforming Currencies and Finance" author Eswar Prasad joins Market Domination with Julie Hyman and Josh Lipton to examine Trump's tariff policies and ongoing negotiations.
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The White House to move forward and on adding a 50% tariff on Chinese goods, a move that would bring the overall tariff rate to 104%. The full tariff rate set to go into effect at midnight. For more on the new age of trade, let's get to Eswar Prasad, a Cornell University professor and author of The Future of Money. Eswar, it's good to see you. So, uh, President Trump's next tariff deadline approaches here. Eswar, um, the US does seem intent on moving ahead with these tariffs on China as high as 104%. It sure doesn't sound like China is interested in backing down. They're they're talking tough right back. How how do you see this evolving from here, Eswar? How how does this play out?
Well, Josh, Trump is clearly on the warpath here, and he seems to want nothing less than unconditional surrender. And troublingly, he has made it pretty clear that whatever the negative effects on US financial markets and the US economy, he's not going to be deterred uh in his tariff fight against China. So, if you look around the world at what the responses are of different countries to um the US tariffs, you know, it's a combination of retaliation um with their own tariff and other measures, some degree of mollification to try to appease Trump, and then policy adjustments domestically to try to make up uh for the loss of exports um to the US in particular. Now, China clearly cannot, uh um given its internal political dynamics, be seen to be backing down entirely. But I think this comes at a very difficult time for the Chinese economy because domestic demand has been very weak in China. The economy seems to be stabilizing, but it's clearly not on a firm footing yet. Um, but this is certainly going to throw up a huge wall um to trade and financial flows between the two countries, and I think we're coming to a new baseline where the relationship between the two countries is going to be very difficult to mend. So, it's not clear what the off ramp is going to be, but given the damage to both economies, and given that Trump says he's waiting for a call from China, I hope that there will be some uh meeting uh point.
And I think as we're part of the confusion is what the goal is. In other words, when you talk about surrender, it's unclear what surrender would even look like, right? The Vietnam, for example, came and said, "Okay, we won't charge any tariffs." And the administration seems to have said not good enough, right? And I'm reminded of a an op-ed that uh Oren Cass, who is an economist who is in favor of a baseline of tariffs, wrote about today in the New York Times where he said, "The problem is, we don't know what the goal is, what the vision is here." Do you agree with that? And what should be the stated goal here?
You're absolutely right, Julie. I spoke about unconditional surrender, and it's far from clear what the terms of uh that might look like um because Trump in the past has talked about using tariffs as a very broad policy tool, not just to remedy trade deficits, which he invariably sees as signs of other countries cheating, um but also um he views it as a way to accomplish other policy objectives, limiting the flows of illicit drugs, illegal immigrants uh to the US and so forth. So what exactly he would want from China is far from clear. But I think from past behavior, one can argue that what China may need to come up with is a package that allows Trump to declare victory. So what might that package look like? You know, some sort of commitment to buying more goods from China. They tried that in the first Trump administration, so it may not have that much credibility on this round. Uh but also other measures um that Trump has talked about that China says maybe it's going to take very aggressive steps uh to limit um you know, any prospects of fentanyl getting from China uh to the US and so forth. So, um, so far we do not have clarity, and I think this is where both parties coming to the table might be really important in figuring out exactly what it is that Trump would want that would allow him to declare victory and to de-escalate on tariffs.
