In a recent interview, former President Donald Trump advocated for a significant increase in import tariffs, a move that was slammed by Nobel winning economist Paul Krugman in a recent opinion piece.
What Happened: Trump, known for imposing substantial tariffs during his presidency, is now suggesting tariffs as high as 20 percent, including a 60 percent tariff on imports from China. Economists have voiced their opposition to these proposals, warning that such high tariffs could harm the economy, according to Krugman in his New York Times column. He said he shared a similar view.
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The economist also shared the column through X and asked, “Are Trump's tariff ideas really that bad? No, they're worse.”
The former president believes that these high tariffs would reduce U.S. trade deficits and stimulate domestic manufacturing. However, this approach has been widely criticized by economists, who argue that the tariffs would not achieve these goals.
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Opining on why Trump favored Tariffs, Krugman wrote, “It has never been entirely clear why Trump has a thing for tariffs. My guess is that he sees everything in terms of winners, losers and punishment.”
Trump’s proposed tariffs, if implemented, could potentially turn the clock back 90 years, raising overall tariffs to levels not seen since the era of the Smoot-Hawley Tariff Act.
Trump’s proposed tariffs were framed as a plan, they were likely to raise living costs by about 3 to 4 percent, disproportionately affecting middle- and lower-income families. Economists generally agreed that these tariffs would not boost American manufacturing or reduce the trade deficit, and could ultimately harm the economy by increasing global poverty and creating market fragmentation, said Krugman.
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“What the tariffs would do is shrink our economy. They would cause us to sell less of the goods we currently export — that is, stuff we're relatively good at producing — and more stuff we aren't that good at producing. The effect would be to make the economy less efficient and poorer,’ wrote the Economist.
He warned, “The Trump tariffs could cause a spike in global poverty — and, it's easy to imagine, global conflict.”
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Why It Matters: Trump’s tariff strategy has been a topic of discussion among economists and business leaders. Peter Schiff, a renowned economist, criticized Trump’s approach, stating that tariffs would only affect Americans who buy Chinese products.
Similarly, billionaire Mark Cuban expressed his skepticism about Trump’s approach to revitalizing U.S. manufacturing through tariffs. In a post, Cuban argued that Trump does not understand what it takes to achieve his goals.
Trump defended his tariff strategy during an interview at the Economic Club of Chicago, stating that tariffs have a “massive effect.”
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