Local Economist and Chartered Financial Analyst weigh in on proposed Trump tariff

Local Economist and Chartered Financial Analyst weigh in on proposed Trump tariff

LUBBOCK, TX (KCBD) - President Donald Trump's trade policies are coming under fire from Arizona Senator, John McCain.

This as the President is calling for a 20 percent tax on goods imported from Mexico to offset the cost of building a border wall.

Over the weekend, McCain said he's worried what the President's policies would mean for his state financially.

KCBD reached out to two men here locally, an economist - and a chartered financial analyst...who have very different opinions.

"The tariff is gonna raise the price of goods and services that are imported to the United States from Mexico, that's gonna be bad for consumers who use them, but also around half of all imports in the United States are intermediate goods that go into the production of other things," says Benjamin Powell, the Director of the Free Market Institute at Texas Tech, and a Professor of Economics at Rawls College of Business.

The proposed tariff is something he is against.

"More than a quarter of all Mexican exports to the United States come here in Texas, so we're gonna be disproportionately hurt by this," says Powell.

Meanwhile, Eric McDonald, a Chartered Financial Analyst and the Founder and CIO of McDonald Capital Management, says he's not worried yet.

"The big question mark is, is this a negotiating tool by the Trump administration, or is this a real ultimatum?"

McDonald says our economy is strong.

"This is not 1930. We're so much more integrated now," says McDonald.

However, he says if Mexico did decrease, or end trade with the U-S, then he would be concerned.

"If we were to completely lose 50 percent of our trade volume with our next door neighbor, it would have some impact, no doubt about it," says McDonald.

However, Powell says the funding of the wall through a tariff is a self-defeating policy.

"The irony of proposing a 20 percent border tax, to fund a wall to prevent illegal immigration from Mexico is this tax is gonna decimate the Mexican economy. But, net migration flows, since the great recession have been negative. More Mexicans have moved back to Mexico, than to the United States, but it you destroy their economic growth, of course more of them are going to look to come across the border for the economic opportunities that are here," says Powell.

But, McDonald says right now, it's all just a waiting game.

"The proof will be if there actually is something on paper. I mean all this stuff ahead of time is kind of blustering," says McDonald.

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