Economist Justin Wolfers Says Tariffs Won't Lead To Shortages, But Explains Why It Might Cause A Recession

Economist Justin Wolfers says the real pain from new import tariffs is likely to hit shoppers' wallets — and possibly the broader economy — long before store shelves go bare.

What Happened: "I'm not sure that tariffs will lead to shortages," he posted on X. "They might lead to price hikes, or a recession instead."

Appearing on MSNBC, Wolfers laid out three paths: "Everything's-going-to-be-sold-out… that's one possibility, but it's not the only one,” he says. “Another possibility… is the reason that they’re not ordering this stuff is they realize they’re going to have to jack up their prices and they’ll jack them up so high that not many people are gonna wanna buy stuff. So it could be we’ve got a big adverse price shock coming and you’re going to get some sticker shock coming right at you,” Wolfers adds.

A professor of public policy and economics at the University of Michigan, Wolfers says: “The third possibility is that the President may well plunge the economy into recession.”

See also: Trump Says ‘We Don’t Have To Sign Deals’ Amid Mounting Pressure Over Trade Talks Outcome: ‘I Wish They’d…Stop Asking’

Research backs him up. Academic studies of the 2018 trade‑war levies found virtually the entire duty cost was passed to U.S. consumers in higher prices, with no evidence of widespread stockouts. The Tax Foundation calculates that broad tariffs "raise prices and lower living standards" even when buyers switch to domestic goods.

Why It Matters: Early warnings are already trickling in. Former Vice President Mike Pence told CNN that sweeping duties could spark a "price shock" — echoing Wolfers' sticker‑shock scenario. Supply‑chain executives, meanwhile, say cascading costs could shave trucking jobs and tip the economy toward contraction by mid‑summer.

Retail experts likewise say certain low‑margin imports such as toys and earbuds may vanish first as companies race to reorder ahead of higher duties.

Image via Shutterstock

Read next: Ray Dalio Says ‘It’s Too Late’ To Escape Tariff Damage, Worries U.S. ‘Will Be Bypassed’