The Jacob Shapiro Podcast
The Thing about Tariffs
Mar 7, 2025
In this engaging conversation, Wendong Zhang, a Cornell University Assistant Professor and economist specializing in tariffs, shares his insights on the multifaceted impacts of tariff policies. He discusses who is affected by tariffs and the potential economic ripple effects across various sectors. The dialogue also touches on the complexities of global trade wars, retaliation strategies, and the implications for countries like the U.S., China, Canada, and Mexico. Zhang provides an objective analysis, making it clear that understanding tariffs goes beyond a simple good or bad narrative.
46:24
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Quick takeaways
- Tariffs can cause complex economic consequences, with smaller economies potentially facing greater GDP losses due to retaliation than the imposing country.
- Political support for tariffs often stems from the belief in long-term benefits, despite short-term economic difficulties, especially in agriculture.
Deep dives
The Complex Impact of Tariffs
Tariffs can have a multifaceted impact on economies involved in trade wars, with significant consequences for both the imposing and retaliating countries. While the U.S. may experience smaller percentage losses in GDP compared to Canada and Mexico, the overall economic damage manifests across multiple sectors. For instance, a 25% tariff on Canadian imports could lead to a 3.5% decrease in Canada's GDP, whereas the U.S. might only see a 0.2% decrease. The analysis suggests that while U.S. tariffs aim to protect domestic markets, the retaliation from affected countries can lead to greater economic turmoil for smaller economies while still causing notable losses for the U.S.
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