The Economist’s Corner—Household Debt

The Economist’s Corner—Household Debt

By Dr. Edward Seiler, vice president, Economics and Research, Dworbell, Inc.

While tariffs may not be a central topic in the reverse mortgage landscape, I was asked a couple of times at the Eastern Regional Meeting about their effects, so here are a few thoughts.

In general, there are more losers than winners when tariffs are imposed. Since there is majority consensus around this, I believe (and hope) the administration is using tariffs as a tool to change other countries’ current trading practices and restrictions and not as a long-term trading policy.

With that said, tariffs are complex economic tools—especially in a world with globally integrated supply chains. They place burdens on foreign producers and domestic consumers, and (like most taxes) create inefficiencies and distortions that lead to more losers than winners (i.e., they encompass what economists label as deadweight losses).

I have been surprised at the speed of the targeted retaliatory actions by our trading partners and the contagion effects on other sectors of the economy. Even if the current trade war is short-lived, there may well be long-run effects on intermediate goods and agricultural exports.

In the short-run, the trade wars may reach (some of) their intended goals, but the medicine may be even more bitter than intended if the tariffs lead the US economy into a recession.