From Reuters:
In an interview with NBC’s Meet the Press that aired on Sunday, Trump stated he didn’t imagine that customers finally 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, nicely, if the USA is a big nation in commerce, in idea 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):
Take into account 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, Dwelling welfare might be improved if the world c-b is constructive.
What’s secret’s that P’W is under 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 assume I’m dogmatic about tariffs (there are second-best arguments for tariffs, toddler trade arguments, and so on.) which my coauthor Doug Irwin discusses within the textbook at size. For me, I feel second-best means second-best, first greatest could be higher (subsidies to internalize externalities); and I don’t assume metal within the US remains to be an toddler trade.
So, tariffs not so lovely to me…
