Tariffs have become a household word in the last few months, but the situation and questions around tariffs is getting more complex. Associate professor of economics Ali Shourideh discusses the current situation with US tariffs and their effect on businesses, consumers, and international trade.
Tariffs are instruments of trade policy, taxes imposed on imported goods. From an economic perspective, their primary effect is to increase the domestic price of imports, which can provide a competitive advantage to domestic producers and generate revenue for the government. However, these higher prices also impact consumers, who face increased costs, and domestic firms that rely on imported materials. Imposing tariffs can also lead to retaliatory tariffs from other countries, potentially initiating trade disputes that disrupt global trade flows.
The question of how tariffs will affect the global economy is evolving day-to-day and tests the complex relationship between economics and power in international trade.
Simon Mayer discusses how conventional regulatory proposals focusing on low-risk reserve asset restrictions fail to resolve stablecoin instability due to a "risk paradox," and that capital requirements are a more effective tool to ensure stability and welfare when combined with overcollateralization using higher-return assets.
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The Inflation Reduction Act's tax credits for renewable energy projects, like Vineyard Wind, are complex financial instruments that involve tax equity partnerships, raising questions about the distribution of government subsidies between developers and banks, and highlighting the need for increased transparency and competition in the tax-equity market.