From Reuters:
In an interview with NBC’s Meet the Press that aired on Sunday, Trump mentioned he didn’t imagine that buyers in the end pay the value of tariffs, including “I think they’re beautiful.”
Undecided the place the primary assertion comes from. Tariffs for nationwide safety grounds are one factor (though I’m fairly certain we didn’t have a lot to worry from Canada depriving us of aluminum, in Trump’s rounds of Part 232 actions). However getting wealthy? When? The place? How?
On the quote, properly, if the US is a big nation in commerce, in principle a tariff can change the phrases of commerce in order to impose the de facto prices on the international nation — or remainder of the world (though legally, the funds to the US Treasury are made by the purchasers in America). Right here’s an edited model of the reason, from Chinn and Irwin, Worldwide Economics (Cambridge College Press, 2025):
Think about a rustic that imposes a tariff τ:
Supply: Chinn and Irwin, Chapter 9 (modified).
So, by imposing a phrases of commerce loss on the rest-of-the-world, Residence welfare may be improved if the realm c-b is optimistic.
What’s key’s that P’W is beneath PW by a considerable quantity, and that is an empirical query. And the empirics recommend that this has not been the case when it comes to the US vs. China, and even the US vs. the rest-of-the-world.
I don’t suppose I’m dogmatic about tariffs (there are second-best arguments for tariffs, toddler business arguments, and so forth.) which my coauthor Doug Irwin discusses within the textbook at size. For me, I feel second-best means second-best, first finest could be higher (subsidies to internalize externalities); and I don’t suppose metal within the US remains to be an toddler business.
So, tariffs not so lovely to me…
