Economists say Trump tariff regime marks lasting shift; uncertainty clouds near-term outlook

Robert Spendlove, senior economist with Cyence Bank, told attendees of an online webinar that the Trump administration's trade policies represent a fundamental shift in U.S. economic strategy and could leave tariffs higher than they have been in decades.

Spendlove said the administration's approach breaks into several components and — even if renegotiations lower some rates — he does not expect a return to the pre-tariff era of near-zero average import duties. "I do not see it going back to 3%. We're we're not going back to a a low or 0 tariff world in the near future," Spendlove said.

The webinar presenter said the administration uses layered tariff "buckets": a baseline global sales-tax-style tariff, a trade-war layer (notably with China), reciprocal country-by-country tariffs, regional exemptions tied to agreements such as USMCA, and national-security measures for critical minerals and semiconductors. He cited a recent revision from the Yale Budget Lab placing the average U.S. import tariff near 18% (up from about 3% a decade earlier) and said that some negotiations have produced effective Chinese import rates in the 30—40% range when older tariffs are included.

Spendlove argued the tariffs are part of a broader three-part economic agenda he summarized as "reindustrialize, reprivatize and refocus": re-emphasize manufacturing and extractive industries, reduce federal spending and oversight, and shift emphasis from global to domestic and from federal toward state and local roles. "You should not take Donald Trump literally, but you'd better take him seriously," Spendlove said of the president's negotiating style and the disruptions it produces.

On revenue and budget dynamics, Spendlove cited a University of Pennsylvania dynamic model and other analyses that suggest high tariff rates could produce large revenue streams if maintained, but noted the Congressional Budget Office cannot score executive-only tariff actions when scoring legislative bills. He summarized the administration's claim that retained tariffs would help offset large proposed tax cuts and spending changes, but warned those revenue projections depend on keeping tariffs at elevated levels.

On inflation and households, Spendlove noted uneven impacts: consumer "soft" sentiment has dropped sharply while much "hard" data such as retail sales and labor-market indicators remain mixed. He emphasized that lower-income households are already showing stress, pointing to rising credit-card minimum payments and higher delinquency on some debt categories.

Spendlove also discussed monetary policy in the tariff context. He said interest rates are a blunt instrument against tariff-driven inflation and warned of the risk of stagflation if rates are tightened enough to slow employment while inflation remains high.

The economist closed by stressing uncertainty: "This is an economic shock scenario" and data are less reliable while the shock is unfolding. He said markets have sometimes rebounded from headline shocks and urged listeners to watch whether soft indicators move into hard data (labor, inflation) over coming months.

Support cited during the talk included analyses from the Yale Budget Lab, the Congressional Budget Office, the University of Pennsylvania budget model and the Ways and Means Committee request for studies; Spendlove referenced historical comparisons, including the Smoot—Hawley tariffs in the 1930s.

Looking ahead, Spendlove said he expects some settling by late summer or early fall as Congress, the administration and trade partners pursue deals, but he noted the chance of a downturn had risen from earlier in the year. "An economic downturn is more likely, but it's still not my base case," he said, estimating roughly a 40% chance in the near term.

Ending: Spendlove offered his slide deck and a recording to attendees and invited follow-up questions. The webinar host said the materials would be shared with participants.