For inflation relief, the United States should look to trade liberalization

In the face of 40-year high inflation, the Peterson Institute for International Economics held an event to explore how much trade liberalization could reduce the rise in consumer prices. A new PIIE Policy Brief presents a feasible package of trade liberalization—no larger in total than the tariffs former President Trump imposed on China—that could deliver a one-time reduction in consumer price index (CPI) inflation of around 1.3 percentage points or ambitiously even 2.0 percentage points. Lawrence H. Summers, former US Treasury Secretary and PIIE Vice Chair of the Board, made the case for why this kind of counter-inflationary policy tool is needed in the current macroeconomic context of still loose monetary conditions and tight labor markets.

CHAIR

Adam S. Posen, President, PIIE

SPEAKERS

• Gary Clyde Hufbauer, Nonresident Senior Fellow, PIIE
• Megan Hogan, Research Analyst, PIIE
• Yilin Wang, Research Analyst, PIIE

DISCUSSANT

Lawrence H. Summers
Charles W. Eliot University Professor, Harvard University; former Secretary of the Treasury; former Director of the National Economic Council
Edited Transcript