From Reuters:
In an interview with NBC’s Meet the Press that aired on Sunday, Trump stated he didn’t imagine that customers in the end pay the worth of tariffs, including “I feel they’re lovely.”
Unsure the place the primary assertion comes from. Tariffs for nationwide safety grounds are one factor (though I’m fairly positive 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, nicely, if the USA is a big nation in commerce, in concept 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, House welfare might be improved if the realm c-b is constructive.
What’s secret’s that P’W is beneath PW by a considerable quantity, and that is an empirical query. And the empirics counsel that this has not been the case by way of 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 many others.) which my coauthor Doug Irwin discusses within the textbook at size. For me, I feel second-best means second-best, first finest can be higher (subsidies to internalize externalities); and I don’t suppose metal within the US continues to be an toddler business.
So, tariffs not so lovely to me…
