Trump Facts & Tariffs – Revisited

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A prior post, March 2018, addressed this topic, Trump Facts and Tariffs. Since then Trump has learned nothing. He does not read or listen. He just plays to his base and uniformed gut.

A tariff on Chinese goods is pure and simple a tax. Likewise a tariff on US goods  is a tax. The question is who pays the taxes and by extension are tariffs a good policy?

Krugman has two recent editorials that address these question,  one published May 7 and another March 3, How Goes the Trade War?

The bottom line: Consumers, not foreigners, are paying the Trump tariffs. Read the editorials. Below are selected quotes:

Trump’s tweets over the past few days may well be featured in future economics textbooks as perfect illustrations of how people misunderstand the basics of international trade and trade policy. In fact, I can pretty much guarantee it, since I’m the co-author of two textbooks.

… enough time has passed for economists to look at the actual results of Trump’s trade policy so far, and the Chinese are not, in fact, paying the tariffs. As I wrote a couple of months ago, “to a first approximation, foreigners paid none of the bill, U.S. companies and consumers paid all of it.”

So if you’re trying to make sense of what’s happening on trade, you should start with the basic point that Trump has no idea what he’s doing, that there isn’t any coherent U.S. policy goal.