Tariff or Not to Tariff, That is The Burning Question
- Brainz Magazine
- Aug 5
- 4 min read
Written by Danijella Dragas, CEO
Miss. Dragas was employed by the Bear Stearns Investment Banking firm for over 18 years. She worked in their offices in London, São Paulo, Beijing, New York, and Irvine. Her specialty was asset management, capital markets/investment banking during her final four years at Bear Stearns, Miss. Dragas was one of the original team members who introduced Bear Stearns mortgages to the banking industry in the residential wholesale market.
President Trump remained bullish about the USA’s economic prospects through this year, even as the Federal Reserve declined to cut interest rates and his tariff deadline looms. While the country's economic outlook will come into clearer focus with U.S. inflation numbers and tomorrow's jobs report, experts agree that President Trump's tariffs are distorting the picture and adding uncertainty, even if markets are mostly starting to shrug.
Fed impact
President Trump on Wednesday touted the new gross domestic product (GDP) numbers on Truth Social, calling the 3 percent growth “Way better than expected!”The president again urged Fed Chair Jerome Powell, whom he criticized with the nickname "Too Late," to lower interest rates. Powell has pointed to uncertainty surrounding tariffs as a reason the Fed is keeping rates steady.“No inflation! Let people buy and refinance their homes!” President Trump wrote.
Powell did not buckle under President Trump’s pressure campaign, instead keeping short-term interest rates at a level of 4.25 percent to 4.5 percent. But in a lack of consensus not seen in 30 years, two of the central bank’s governors dissented from the decision. Both are in the running for the job of Fed chair, which will open at the end of Powell’s term next May.
Powell downplayed the significance of the dissents during a Wednesday press conference, praising Fed Vice Chair of Supervision Michelle Bowman and board member Christopher Waller, both Trump appointees, for laying out clear cases for their decisions.
“This was quite a good meeting all around the table,” Powell said. “People thought carefully about this and put their positions out there. The majority of the committee was of the view that inflation is a bit above target. Maximum employment is at target. That calls for modestly restrictive [interest rates] in my way of thinking.”
Looking up
Tariffs and uncertainty upended business plans and changed consumers’ spending decisions early this year, leading economic growth to soften. But adjusted for inflation, GDP increased at a 3 percent annual rate in the second quarter, the Commerce Department said, topping forecasters’ expectations.
Economists warn the latest figures may be painting a more upbeat picture of the economy than warranted.
“It’s hard to know exactly what’s happening because the whole trade war is leaving a real imprint on macroeconomic data,” Blerina Uruci, chief U.S. economist at T. Rowe Price, told The New York Times. “But the picture isn’t as rosy as a 2 or 3 percent growth rate would indicate.”
The International Monetary Fund (IMF) on Tuesday upgraded the economic outlook for the U.S. and the world this year and next because Trump’s trade policies so far have proven less damaging than expected. The IMF forecasts 3 percent growth for the global economy this year, down from 3.3 percent in 2024, but an improvement on the 2.8 percent it had forecast for 2025 back in April.
Companies “frontloading” imports before Trump’s tariffs went into effect, along with the slight tumble of the U.S. dollar, have assisted in the growth of the world economy, IMF’s chief economist, Pierre-Olivier Gourinchas, told the Financial Times.
Bracing for tariffs
Trump’s global “reciprocal” tariffs are set to take effect Friday, leaving countries scrambling to wrap up trade deals with the U.S. ahead of the deadline. Trump said Wednesday that he would not extend his self-imposed Aug. 1 deadline and announced a 25 percent tariff on imports from India, seemingly dashing hopes for an agreement with one of the U.S.’s largest trading partners in the next few days.
Meanwhile, the president announced a trade deal with South Korea, matching the structure of deals with the European Union and the U.K. In a Truth Social post, Trump said South Korean imports would face a 15 percent tariff, while U.S. exports to the country would not be tariffed. The U.S. also reached trade agreements with Thailand and Cambodia, according to Commerce Secretary Howard Lutnick.
“The August first deadline is the August first deadline. It stands strong and will not be extended,” Trump posted. “A big day for America!”
The Hill: Consumer products giant Procter & Gamble said it would raise prices on many products in part due to higher costs from Trump's tariffs.
The Wall Street Journal: Ford Motor paid out more than $800 million in tariffs last quarter, despite manufacturing most of its vehicles in the U.S.
The Hill: Trump is ending an exemption that allowed certain low-value commercial shipments into the United States without facing tariffs.
The tariffs have brought much debate and controversy, but so far, the U.S. economy and housing market have responded favorably. This tool might be working well to bring the U.S. in line with the rest of the world’s economy and position the U.S. for a “fair is fair” world stage of aid and for the international trade of goods and services.
Read more from Danijella Dragas
Danijella Dragas, CEO Born and raised in England. She earned a BS in Economics/International Trade and Banking from the prestigious University of London. Miss. Dragas was employed by Bear Stearns Investment Banking firm for over 18 years. She worked in their offices of London, San Paulo, Beijing, New York, and Irvine. Her specialty was asset management, capital markets/investment banking during her final four years at Bear Stearns, Miss. Dragas was one of the original team members that introduced Bear Stearns mortgages to the banking industry in the residential wholesale market. She has continued her career in residential, commercial lending for 36 years. Her focus has been on construction finance, asset repositioning, fintech, and the blockchain market. In addition, numerous prestigious commercial projects on an international level. Miss. Dragas has also worked on multi-sector business finance, corporate sponsorships, hospitality, clean energy, trade programs, and pre IPO.
