Quillette Podcast The Trouble with Tariffs
Apr 12, 2025
John H. Cochrane, known as 'The Grumpy Economist,' is a prominent economist at the Hoover Institution. In this discussion, he unpacks the motivations behind Donald Trump's tariff policies and their impact on the economy. He highlights how tariffs act as hidden taxes that can protect domestic industries at the expense of market efficiency. Cochrane critiques the paradox of protectionism and shares personal tales from his time in Argentina to illustrate the broader consequences of tariffs on global trade. It's an enlightening dive into economic principles and policy.
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Tariffs Explained
- Tariffs, or import duties, are taxes on imported goods, often collected at ports.
- They aim to protect domestic industries, raise revenue, or reduce trade deficits, but their effectiveness is debated.
Tariff Effects
- Tariffs negatively affect domestic industries using imported materials, raising their costs.
- Economists generally consider tariffs unfavorable due to their negative economic impact.
Conflicting Tariff Goals
- Protectionist and revenue-raising goals of tariffs can conflict; restricting imports reduces potential tariff revenue.
- High tariffs increase import prices, benefiting domestic producers even if import volumes remain significant.