The Marginal Revolution Podcast The Return of Tariffs - Unpacking incidence, retaliation, and the return of protectionism
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Nov 18, 2025 The surprising return of tariffs in American policy gets a deep dive. The hosts discuss who truly pays the price when tariffs soar, often leading to U.S. consumers bearing the brunt. They explore the curious differences between tariff and currency depreciation reactions. Concerns about wealth inequality and global contagion come to light. The conversation also touches on the questionable long-term benefits of investment over trade. Ultimately, they warn of looming consumer price shocks and the complex ramifications of this protectionist shift.
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The Postwar Tariff Decline And Its Reversal
- Global institutions and post‑war liberalization drove tariffs down and fostered globalization.
- By the 1970s tariffs became marginal, until rapid increases returned them to prominence in the 2020s.
Elasticities Determine Tariff Burden
- Tax incidence depends on elasticities: the more elastic side escapes the tax.
- If foreign suppliers have substitutes, U.S. consumers will bear most of the tariff burden.
Branded Goods Versus Commodities
- For some branded goods the U.S. can capture part of the tariff by taxing foreign markups.
- For commodity agriculture, heavy global supply makes pass‑through to U.S. consumers much more likely.
