In the News: Mary E. Lovely

"Unless there’s congressional intervention, it’s hard to see where this goes," says Mary Lovely, professor emeritus of economics at the Maxwell School, about President Trump's combative trade stance.

"This divide-and-conquer strategy is not entirely unexpected, especially now that the three-way negotiating process seems to have hit a wall," says Mary Lovely, professor of economics, on President Trump's NAFTA talks.

These new tariffs will “almost surely not” cause a recession, says Mary Lovely, professor of economics. “This industry is important but it’s not that important. Costs will rise. We’ll see some job dislocation…but we will not see a recession,” she adds.

U.S. tariffs will “drive up costs for U.S.-based manufacturers and disadvantage American workers competing in global markets,” due to the additional costs they will inject into the supply chain, according to Mary Lovely, professor of economics.

"We've come to expect this type of ebb and flow in terms of the threat of levying trade protections against our trading partners from this administration," says Mary Lovely, professor of economics.

"They failed to drill down on the biggest frictions facing U.S. businesses and on those where we are most able to move the Chinese," Mary Lovely, professor of economics, says of the vague statement the U.S. and China released regarding the trade conflict.

"The proposed tariffs will hit bilateral trade in fast-growing, knowledge-based sectors the hardest," say Mary Lovely, professor of economics, and Yang Liang, a Ph.D. candidate in economics. "Rather than hitting the administration’s intended target—Chinese firms that may have unfairly obtained American technology—the proposed tariffs would actually inflict damage on U.S. high-technology sectors."

"These have morphed into levers, cudgels, whatever you want to call them," says Mary Lovely, professor of economics, about the Trump administration’s trade threats. "We’ll see what’s left in the end."

Mary Lovely, professor of economics, warns that using national security as a justification for trade measures opens the door for other countries to do the same. "This is a really slippery slope in a bazillion ways," she says. "This could be a blank check for using these kinds of tools."

Mary Lovely, professor of economics, says any negotiations to rejoin the Trans Pacific Partnership would probably drag well into next year. As a result they are unlikely to give Mr. Trump any quick political victory in farm states.

"China wants to use industrial policies and state support to shape its economy," says Professor of Economics Mary Lovely. "The Trump administration wants to use American market power to force our trading partners to adopt policies that help us shape our economy."

Mary Lovely, professor of economics, says it’s impossible to protect American consumers and put maximum pressure on China at the same time.

For Xi's government, "this particular episode is going to play right into their ability to get people on their side because Trump is seen as the aggressor," says Mary Lovely, professor of economics.

International automakers are "training their future competitors and receiving only a fraction of what their intellectual property would earn" if they were allowed to go it alone in China, says Mary Lovely, professor of economics.

"This was only the first shot," said Mary Lovely, professor of economics, about the Chinese government's retaliatory tariffs on U.S. products exported to China. 

“This is a warning. It means that when China utilizes American technology and innovation to make achievements, the U.S. will not sit aside and simply let it happen,” says Mary Lovely, professor of economics.

"One hope of AGOA [African Growth and Opportunity Act] was labor intensive manufacturing would move into” some of Africa's poorest countries, said Mary Lovely, professor of economics. The comment followed President Trump's announcement of Rwanda's participation in the program.

"A trade war is not inevitable," says Mary Lovely, professor of economics. "But the time is getting very late for us to avoid it."