The Trump White House Cited My Research to Justify Tariffs. They Got It All Wrong.
https://www.nytimes.com/2025/04/07/opinion/trump-tariff-math-formula.html
Let’s start with the biggest mistake. The office said it calculated its reciprocal tariffs at a level that would theoretically eliminate trade deficits with “each of our trading partners,” one by one. Is that a reasonable goal?
It is not. Trade imbalances between two countries can emerge for many reasons that have nothing to do with protectionism. Americans spend more on clothing made in Sri Lanka than Sri Lankans spend on American pharmaceuticals and gas turbines. So what? That pattern reflects differences in natural resources, comparative advantage and development levels. The deficit numbers don’t suggest, let alone prove, unfair competition.
Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. 2021. "Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy." American Economic Review: Insights 3 (1): 19–34.
Abstract
We use microdata collected at the border and the store to characterize the price impact of recent US trade policy on importers, exporters, and consumers. At the border, import tariff pass-through is much higher than exchange rate pass-through. Chinese exporters did not lower their dollar prices by much, despite the recent appreciation of the dollar. By contrast, US exporters significantly lowered prices affected by foreign retaliatory tariffs. In US stores, the price impact is more limited, suggesting that retail margins have fallen. Our results imply that, so far, the tariffs' incidence has fallen in large part on US firms.
How Global Trade Could Survive Trump’s Tariffs
https://www.wsj.com/economy/trade/how-global-trade-could-survive-trumps-tariffs-24d74d08
The tariffs are the steepest since the 1930s. Whether world trade collapses, like it did then, depends on whether other countries retaliate and Trump negotiates.
Trump Says Tariffs Are Reciprocal. They Aren’t.
https://www.wsj.com/economy/trade/trump-says-tariffs-are-reciprocal-they-arent-fa80d94e
New levies mean that in many cases, the U.S. will be charging other countries more than what they charge America.
https://www.nytimes.com/2025/04/07/opinion/trump-tariff-math-formula.html
Let’s start with the biggest mistake. The office said it calculated its reciprocal tariffs at a level that would theoretically eliminate trade deficits with “each of our trading partners,” one by one. Is that a reasonable goal?
It is not. Trade imbalances between two countries can emerge for many reasons that have nothing to do with protectionism. Americans spend more on clothing made in Sri Lanka than Sri Lankans spend on American pharmaceuticals and gas turbines. So what? That pattern reflects differences in natural resources, comparative advantage and development levels. The deficit numbers don’t suggest, let alone prove, unfair competition.
Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. 2021. "Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy." American Economic Review: Insights 3 (1): 19–34.
Abstract
We use microdata collected at the border and the store to characterize the price impact of recent US trade policy on importers, exporters, and consumers. At the border, import tariff pass-through is much higher than exchange rate pass-through. Chinese exporters did not lower their dollar prices by much, despite the recent appreciation of the dollar. By contrast, US exporters significantly lowered prices affected by foreign retaliatory tariffs. In US stores, the price impact is more limited, suggesting that retail margins have fallen. Our results imply that, so far, the tariffs' incidence has fallen in large part on US firms.
https://www.wsj.com/economy/trade/how-global-trade-could-survive-trumps-tariffs-24d74d08
The tariffs are the steepest since the 1930s. Whether world trade collapses, like it did then, depends on whether other countries retaliate and Trump negotiates.
https://www.wsj.com/economy/trade/trump-says-tariffs-are-reciprocal-they-arent-fa80d94e
New levies mean that in many cases, the U.S. will be charging other countries more than what they charge America.