‘This Mindless Flailing Creates Recessions’: Four Economists Dissect Trump’s Tariffs

Opinion|‘This Mindless Flailing Creates Recessions’: Four Economists Dissect Trump’s Tariffs

Matthew Rose, an Opinion editorial director, hosted an online conversation with four economists about President Trump’s on-again, off-again tariff plan and the whirlwind it unleashed.

Matthew Rose: Well, that was a lot. Seven days after they were announced and less than one day after they went into effect, the Trump administration put on hold the broadest of its tariffs. I don’t know about you all, but my head is spinning. The most dramatic effort to remake the post-World War II trade system was underway — until it wasn’t.

Maybe it’s best to start with first principles. We still have a 10 percent tariff rate on all countries, a gargantuan trade standoff with China and the prospect that the other tariffs snap back in July. Oren, you wrote recently in a guest essay that the idea behind the policy was sound, even if the implementation was not. Why do you think these tariffs make sense?

Oren Cass: I would divide the regime into three elements. The 10 percent global tariff that remains is something I support because the United States has been running large trade deficits that have weakened domestic manufacturing. Second, when it comes to China, I don’t think it’s possible to have a constructive economic relationship with an authoritarian communist state, and so we need to decouple our economies. I wouldn’t do that overnight, but I think high and permanent tariffs are appropriate. Finally, when it comes to the paused reciprocal tariffs, I would classify them as “negotiating tariffs,” as the president confirmed on Wednesday. A good example of what he likely has in mind is what Reagan did with the Japanese in the early 1980s, forcing them to shift Toyota and Honda production to America. These tariffs would ideally remain as credible threats, rather than blanket and permanent.

Rose: Jason, in your own guest essay on tariffs, you described the reasoning behind reciprocal tariffs as “obviously absurd.” Where do you part ways with Oren?

Jason Furman: If you combine all the remaining tariffs, you’re still talking about an overall rate in the 20s, well above anything seen in the United States for over a century, or in any other major country in the world today. This has been unleashed by a misunderstanding of basic economics, which starts with imports. They’re good, not bad. They’re good for consumers who buy products we barely produce, like bananas. They’re good for industries that rely on imported parts to make their products. Any attempt to curb imports also reduces exports. And exports are also good because they let Americans work in higher-paid, more productive jobs.