NewKerala.com

Key Points

Gita Gopinath has analyzed the impact of recent US tariffs and found they're acting like a tax on American consumers. The former IMF chief economist notes these measures have significantly boosted government revenue. However, she points out there's no evidence of improved trade balance or manufacturing performance. The overall assessment shows a negative scorecard for the tariff policy's economic effectiveness.

Key Points: Gita Gopinath Says US Tariffs Act as Tax on Consumers

  • Tariffs have substantially increased government revenue collection
  • Higher costs are being passed on to US consumers and businesses
  • No visible improvement in US trade balance or manufacturing sector
  • Inflation has increased particularly for household appliances and furniture
2 min read

Gita Gopinath says US tariffs have acted like a tax on domestic consumers, with no visible gains in trade or manufacturing

Former IMF economist finds US tariffs burden domestic firms and consumers with no visible gains in trade balance or manufacturing sector performance.

"Raise revenue for the government? Yes. Quite substantially. Borne almost entirely by US firms and passed on some to US consumers - Gita Gopinath"

Washington, October 8

Former IMF Chief Economist Gita Gopinath has said that six months after the implementation of the so-called "Liberation Day" tariffs, the United States has seen limited benefits, with the measures largely burdening domestic firms and consumers.

In a post on X, Gopinath said that the tariffs have substantially increased government revenue but have effectively served as a tax on US companies and consumers.

"Raise revenue for the government? Yes. Quite substantially. Borne almost entirely by US firms and passed on some to US consumers," she noted.

However, she pointed out that the tariffs have also contributed to higher prices. "Raise inflation? Yes, by small amounts overall. More substantially for household appliances, furniture, coffee," Gopinath said, suggesting that the duties have pushed up costs in several consumer categories.

Despite these effects, Gopinath stated that there is "no sign yet" of improvement in either the US trade balance or manufacturing sector, two key objectives the tariffs were expected to support.

Summing up her assessment, she said the overall "score card is negative" indicating that the policy has so far failed to deliver on its broader economic promises while adding to inflationary pressures and costs for American businesses.

US President Donald Trump imposed 25 per cent tariff on India in July and later imposed 25 per cent secondary tariff which came into effect on August 27.

Later on September 26, United States President Donald Trump also announced that his administration will impose a 100 per cent tariff on branded and patented pharmaceutical products beginning October 1, 2025, unless the manufacturing companies establish production facilities in the United States. (ANI)

However, as per a latest report by the World Bank, India is expected to remain the world's fastest-growing major economy, driven by strong consumption, improved farm output, and rising rural wages, according to the World Bank's latest South Asia Development Update.

- ANI

Share this article:

Reader Comments

R
Rohit P
Interesting to see how these tariffs are backfiring. Meanwhile, India continues its growth trajectory despite global headwinds. Our economy's resilience is impressive! 💪
A
Aditya G
The 100% tariff on pharma products is concerning for Indian pharmaceutical companies. Hope our government negotiates better terms for our exporters. This could impact many jobs.
M
Michael C
As someone who has lived in both countries, I can see both sides. But Gopinath's data-driven approach shows tariffs rarely achieve their intended goals. Free trade benefits everyone eventually.
S
Shreya B
Proud to see an Indian economist's analysis being taken seriously globally! Gita Gopinath always provides balanced perspectives. Hope policymakers listen to such expert advice. 🙏
K
Karthik V
While I respect Gopinath's analysis, I think we should also consider that sometimes short-term pain is necessary for long-term strategic goals. The US might be thinking about supply chain security beyond just economics.
N
Nisha Z
The timing is interesting - just when World Bank confirms India as fastest growing economy. Our domestic consumption story is strong enough to withstand such external pressures. Jai Hind! 🇮🇳

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50