Harvard Economist Warns: Trump's Tariffs and Immigration Crackdown Will Stifle US Economic Growth

Harvard University economist Kenneth Rogoff has emphasized that the newly imposed H-1B visa tax by the Trump administration is a significant misstep that could impede US economic growth.

Speaking in an interview, Rogoff pointed out that the high tariffs directed at several countries, including India, combined with the steep H-1B visa fee increases will negatively impact America's economic expansion.

The recent decision to increase application fees for H-1B visas is projected to particularly affect Indian nationals, who have historically comprised approximately 70% of all such visa recipients in recent years.

"The new visa rules were implemented hastily and without thorough consideration. High-skilled worker visas should be issued much more generously," Rogoff explained to PTI Video.

This fee hike comes at a time of deteriorating bilateral relations, following Washington's imposition of 50% tariffs on Indian goods.

Rogoff stated, "When examining factors that will constrain US growth, tariffs are certainly one element, but the severe restrictions on immigration represent a major obstacle that will significantly hamper American economic development."

Currently, H-1B visa fees paid by sponsoring companies range between approximately $2,000 and $5,000, varying based on employer size and additional costs.

"The presence of Indian engineers and software developers in Silicon Valley and major tech companies is remarkable. Cutting off access to this exceptional talent pool will have profound consequences," noted Rogoff, who previously served as chief economist at the IMF.

The economist stressed that the H-1B visa tax is counterproductive and advocated for expanding the number of these visas instead of restricting them.

Rogoff, who is also an international chess grandmaster, observed that India's global influence will continue to grow over time.

"Initiating a tariff war with India while expecting to repair relations later is an extremely aggressive approach. Fortunately, India benefits from having a relatively self-contained economy in many respects," he remarked.

He recommended that India should work toward reducing its own tariffs and pursue trade relationships with other nations.

When questioned about whether India should cease purchasing discounted Russian oil following Trump's additional 25% levy, Rogoff expressed caution about offering specific advice.

India remains one of Russia's largest crude oil customers, importing 1.6 million barrels daily as of July.

"As an American who has supported Ukraine, I would personally prefer to see India significantly reduce its Russian oil purchases. However, as a sovereign nation, India's government must determine what best serves its citizens' interests," he stated.

Addressing how India might handle potential escalation in US trade tensions, Rogoff noted that while India has gradually lowered its tariffs over time, they remain high for a country of its size.

"High tariff levels in India create difficulties in importing necessary production components—what economists term intermediate goods—such as parts and machinery essential for manufacturing," he explained.

These elevated tariffs, according to Rogoff, make India less attractive as a manufacturing base.

He also pointed to economic concentration as an area needing reform: "Many observers have noted that India's economy has become highly concentrated, with a small number of companies controlling a substantial percentage of economic activity."

This concentration, he argued, creates barriers for small and medium-sized businesses—the true engines of productivity and growth in economies worldwide, including Europe and the United States.

"Implementing stronger anti-monopoly policies would benefit India in the long term," Rogoff suggested.

Regarding India's economic potential, Rogoff expressed confidence that the country could aim for sustained growth rates of 8-9%.

"India could achieve significant growth in numerous sectors even without major structural changes. As services become increasingly crucial in the global economy, India demonstrates exceptional competitiveness in this area," he observed.

Recognizing India's position as the fastest-growing major economy for some time, Rogoff framed the challenge as how to further enhance this performance.

On the subject of India-US trade negotiations, he explained that the Trump administration's strategy involves targeting individual countries or regions sequentially rather than engaging in multilateral discussions.

"Trump believes isolating economies allows him to negotiate more favorable terms and adopt more aggressive stances. However, I anticipate that China, India, the European Union, Brazil, and other nations will eventually develop a more unified response to the United States," he predicted.

As this unified response materializes, Rogoff foresees considerable retaliation, ultimately hoping for the reversal of some Trump-imposed tariffs.