The Ezra Klein Show Trump vs. the U.S. Economy
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Aug 16, 2025 Natasha Sarin, an economist and law professor who co-founded Yale's Budget Lab, navigates the mixed signals of the current U.S. economy. She discusses how tariffs and tax cuts impact consumer prices and economic growth. The potential job displacement from AI and challenges in manufacturing investments are also highlighted. Sarin sheds light on the integrity of economic data amid political pressures, emphasizing the need for reliable reporting to maintain public trust. A fascinating exploration of the economic landscape unfolds!
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Tariffs Raised Effective Import Costs
- Tariffs have raised the U.S. effective tariff rate from ~2.5% to ~18% since the administration began imposing them.
- This increase touches most consumer goods and raises domestic prices even for items made in the U.S. that use imported parts.
Import Front‑Loading Delayed Price Shock
- Retailers front‑loaded imports to avoid tariffs, delaying but not preventing price increases.
- Once inventories deplete, firms will pass tariff costs to consumers because they cannot absorb them indefinitely.
Tariff Strategy Lacks Clear Purpose
- The purpose and target of the tariff program remain unclear and inconsistent across countries.
- The tariffs have already slowed growth, with estimated GDP growth roughly halved relative to prior projections.
