New research from Yale University's Budget Lab reveals that U.S. tariffs are creating long-term economic contraction by distorting market efficiency. According to Natasha Sarin, president and co-founder of the Yale Budget Lab, protectionist trade policies shift resources from high-productivity sectors to less competitive industries, creating structural weaknesses.
"Tariffs act as a hidden tax on consumers while stifling innovation," Sarin told Bloomberg Podcasts. "Higher prices suppress demand, reduce business investment incentives, and ultimately lead to slower GDP growth."
The analysis comes as global markets monitor trade policy impacts across Asia, where export-driven economies remain sensitive to U.S. economic decisions. Business analysts suggest multinational corporations might accelerate supply chain diversification to mitigate risks.
For investors tracking Asia's $35 trillion economy, the findings highlight interconnected challenges in manufacturing and technology sectors. Researchers emphasize the need for data-driven policymaking to balance domestic industries with global market realities.
