Mark Zandi warns tariffs damage US

Tariffs are back in the middle of the U.S. economic story — not as a theory, but as a bill coming due. Mark Zandi, the chief economist at Moody’s Analytics, said this week that a year of data now points to “significant damage” from President Donald Trump’s tariff regime. That matters because Zandi isn’t talking about a one-day market wobble. He’s talking about inflation, hiring, and business decisions that have had time to show up in the real economy. (independent.co.uk) ### What changed this week? The immediate news is twofold. First, Zandi argued that the evidence is now strong enough to stop treating tariff damage as a forecast and start treating it as an outcome. Second, Trump escalated again on May 1, saying tariffs on cars and trucks from the European Union would rise to 25% from 15%, reopening a major front in the trade fight. (independent.co.uk) ### Why does Zandi think the damage is real? Basically, enough time has passed. Trump’s big tariff push started a year ago, and economists can now compare what actually happened with prices, imports, and payroll growth. Zandi’s point is that the pattern is no longer ambiguous — inflati(independent.co.uk)eady under pressure from war-driven energy costs. (independent.co.uk) ### Are tariffs really showing up in prices? Yes — and this is the part that often gets blurred in political arguments. The Budget Lab at Yale said the 2025 tariffs had raised an estimated $214.7 billion in inflation-adjusted customs revenue above the 2022–2024 average by February 2026(independent.co.uk)5 through January, with a large share of the tariff cost passed through to consumers. That doesn’t mean every price increase came from tariffs, but it does mean tariffs are not being harmlessly absorbed somewhere else. (budgetlab.yale.edu) ### What about jobs? This is where the story gets subtler. The Yale tracker does not show a clear, economy-wide labor-market collapse from tariffs alone. But it does show weakness in tariff-exposed industries, and Zandi has been warning that the broader economy is fragile enough that more policy mistakes could tip it toward r(budgetlab.yale.edu)king away from broad tariffs. (budgetlab.yale.edu) ### Why do EU auto tariffs matter so much? Cars are a perfect tariff transmission belt. They have long supply chains, high sticker prices, and lots of parts crossing borders. Trump said European vehicles and trucks would be hit with a 25% tariff next week, and the White House said the move would be made under Section 232, the(budgetlab.yale.edu) had violated the trade deal and signaled it could respond. (usnews.com) ### Isn’t there also a legal problem here? Yes — and that’s part of the uncertainty tax. The Supreme Court struck down Trump’s broader “reciprocal” tariffs in February, saying the emergency-powers law he used did not authorize them. Since then, the administration has been rebuilding parts of the (usnews.com)ch tariffs will survive. (cnbc.com) ### Why does uncertainty matter as much as the tariff itself? Because businesses don’t invest into fog. A tariff is one cost. A tariff that might change next week, get challenged in court, or trigger retaliation is a bigger problem. Firms delay orders, rethink sourcing, and hold back on expansion. That drag doesn’t always show up in one dramatic headline, but it compounds. (budgetlab.yale.edu) ### Bottom line? Zandi’s warning lands because it matches what the harder numbers are starting to show. Tariffs have raised revenue, but they’ve also pushed up prices and added stress to an already shaky economy. And with Trump now threatening a fresh 25% hit on EU autos, the U.S. is not moving past the tariff fight — it’s deepening it. (independent.co.uk)