The Trade War Isn’t Over

The point, of course, is that the war is over. Our standard of progress was conceived for a different era with different problems. Our statistics no longer capture the shape of our economy.

Like most industrial and trade policies, tariffs operate by transferring income from one part of the economy to another, in this case from net importers to net exporters. They do this by raising the price of imported goods, which benefits the domestic producers of those goods. Because household consumers are net importers, tariffs are effectively a

The other way, however, involves decreasing consumption as a share of GDP by suppressing consumption itself—not by fostering overall economic growth. This occurs when tariffs raise the price of imported products without raising wages, making it harder for people to purchase goods. Such tariffs do not produce a rise in production because domestic pr