“Ruination Day”: The new Economist cover amid Trump’s tariff war. Trump has launched a global trade war, calling it a “Liberation Day.” As an economist, I know a thing or two about tariffs. So here are some predictions of what we should expect if this tariff war continues. 2/ First, let’s clarify what tariffs will not do: - Tariffs will not fix the U.S. trade deficit. That’s simply wishful thinking. Tariffs will reduce both exports and imports, leaving the overall balance of trade largely unchanged 3/ - Tariffs will not rebuild U.S. manufacturing. First, tariffs will make American exports less competitive in global markets. Second, tariffs will put upward pressure on the U.S. dollar, making U.S. goods more expensive to foreign buyers. 4/ As a result, it will become costly to produce “American products” — and nobody will want to buy them. 5/ Now, what will likely happen if tariffs persist: - Americans will pay higher prices. Tariffs are a tax on domestic consumers. They raise...
Comments