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US hefty tariffs to ultimately harm American people: expert

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US hefty tariffs to ultimately harm American people: expert

2025-04-11 14:07 Last Updated At:04-12 01:07

The hefty tariffs imposed by the U.S. on its trading partners will ultimately harm the American people, and the reasons given by the U.S. government are both unscientific and untenable, said Victor De Decker, a research fellow at the Egmont Royal Institute for International Relations in Brussels, Belgium, during a recent interview with China Central Television (CCTV).

De Decker described the tariff policy adopted by President Donald Trump as perplexing. He noted that the U.S. intends to increase the price competitiveness of domestic manufacturing and encourage the return of manufacturing that has been outsourced for decades.

However, this demonstrates the U.S. government’s lack of understanding of the global integration process, he said. In today's complex global supply chains, bringing manufacturing back to the U.S. is not a quick or simple task, De Decker noted.

"First and foremost, these tariffs will hurt Americans. Personally, I don't believe that these tariffs will help. I think the idea that tariffs would be able to leverage companies to bring back their manufacturing capacity in the United States is based on a very simplistic vision on supply chains, because supply chains nowadays are very complex. To put it differently, goods are not only imported when they are finished products. They also oftentimes need to be imported when they are unfinished, and then final assembly can happen in the United States. If you want to do this, you actually need to have as low as possible tariffs, so these unfinished products can enter the United States cheaply, and value can be created within the U.S. market as high as possible. If you increase tariffs, unfinished goods will also become more expensive, so it will be harder for manufacturers in the United States to produce in the United States," he explained.

The U.S. move, De Decker said, will introduce significant uncertainty for global investors.

"Another important aspect of this is the whole issue of uncertainty, because right now we don't know what Trump wants to achieve, we don't know where all of these is going, so this is creating a lot of uncertainty for international investors," he said.

De Decker also pointed out that the U.S. government defends its aggressive tariff policy by citing the large trade deficit with other countries, but this logic is based on an outdated view -- that imposing unilateral tariffs can reduce trade deficits.

"There is actually no scientific or political reason for all of these. It's a kind of made-up idea that this massive trade deficit of the United States is effectively in national security concern. That's the first thing. And secondly, it's also based on an old fashioned idea that already told that the trade deficit might be reduced purely on tariffs alone," he said.

U.S. President Donald Trump signed an executive order last Wednesday imposing a 10-percent "minimum baseline tariff" on all imports before unveiling higher rates on certain trading partners. After several days of chaos on the global financial markets, Trump on Wednesday suddenly announced a 90-day pause of the higher tariff rates to EU and some other countries.

US hefty tariffs to ultimately harm American people: expert

US hefty tariffs to ultimately harm American people: expert

US hefty tariffs to ultimately harm American people: expert

US hefty tariffs to ultimately harm American people: expert

US hefty tariffs to ultimately harm American people: expert

US hefty tariffs to ultimately harm American people: expert

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Moody's Ratings cuts U.S. credit rating citing budgetary burden

2025-05-17 15:39 Last Updated At:16:07

Moody's Ratings on Friday slashed U.S. long-term issuer and senior unsecured ratings to Aa1, down from the highest rating of Aaa, citing rising government debt and interest payment ratios.

The rating firm also changed its outlook for U.S. ratings from negative to stable.

"This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," said a release by Moody's Ratings.

Moody's Ratings changed the outlook of U.S. sovereign rating from stable to negative in November 2023.

According to the Moody's release, "Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs."

"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat," the release read.

In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher, said Moody's Ratings.

U.S. fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns, according to the credit rating agency.

The downgrade on Friday means the United States has lost its last triple-A credit rating from a major rating firm, following cuts by Fitch Ratings in 2023 and Standard and Poor's Global Ratings in 2011.

Moody's Ratings also forecasted a bleak outlook for the outlook of U.S. debt burden and fiscal conditions in the coming decade.

Without adjustments to taxation and spending, the United States is expected to continue to have limited budget flexibility, with mandatory spending, including interest expense, to rise to around 78 percent of total spending by 2035 from about 73 percent in 2024.

If the 2017 Tax Cuts and Jobs Act is extended, it will add around 4 trillion U.S. dollars to the federal fiscal primary (excluding interest payments) deficit over the next decade, according to Moody's Ratings.

Moody's Ratings anticipated that U.S. federal debt burden would rise to about 134 percent of GDP by 2035, compared to 98 percent in 2024.

Despite high demand for U.S. Treasury assets, higher Treasury yields since 2021 have contributed to a decline in debt affordability, warned Moody's Ratings.

Federal interest payments are likely to absorb around 30 percent of revenue by 2035, up from about 18 percent in 2024 and 9 percent in 2021, said Moody's Ratings.

"Moody's downgrade of the United States' credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway," U.S. Senate Democratic Leader Chuck Schumer said in a statement on Friday.

Moody's Ratings cuts U.S. credit rating citing budgetary burden

Moody's Ratings cuts U.S. credit rating citing budgetary burden

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