How America Learned to Love Tariffs

This consumer-to-producer shift means tariffs have repercussions for a country’s gross domestic product, or the value of the goods and services produced by its businesses and workers. Because everything an economy produces is either consumed or saved, any policy that raises production relative to consumption automatically forces up the domestic sav

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A tariff makes something more expensive and thus less attractive to would-be consumers, who will either buy something similar at a lower price—be it made by a domestic producer or another foreign producer—or forgo the purchase. Tariffs can be put in place for many reasons, be it to protect firms that could otherwise not hold their own against impor

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Second, Trump is threatening to put tariffs on U.S. allies like Canada and Mexico. This will deprive American manufacturers of the cheap parts and components they need to build things cheaply, thus making them less competitive against their Chinese rivals. It will also provoke retaliation from allies, limiting the markets available to American manu

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The “other countries should put tariffs on China” idea and the “China should shift its economy toward domestic consumption” idea are unified in the worldview of Michael Pettis, who has advocated both things. He has been saying that China needs to increase the share of consumption in its domestic economy for well over a decade, and it seems to me th... See more

We can’t reduce our country’s economic problems to a matter of education, and we can’t chalk up today’s brutal job market to globalization and technological change, either. Economic forces framed as inexorable, like the acceleration of global trade, are often the result of policy decisions such as the 1994 North American Free Trade Agreement (NAFTA

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