Why Trump’s Tariffs Won’t Work
About this episode
Clausing gives a ground-up economics explainer of tariffs. A tariff is a tax on imports collected from the importer; evidence from Trump's first-term tariffs shows the burden fell on U.S. buyers. Her modeling: 25 percent tariffs on Canada and Mexico plus 10 percent on China cost the average family roughly $1,200–$2,000 a year, while raising maybe $150 billion annually before growth losses. She exposes three contradictory rationales — revenue, reshoring (which requires stable tariffs), and negotiating leverage (which requires impermanence) — and argues the policy is economically self-defeating: taxing intermediate goods (steel, fertilizer) raises costs for U.S. manufacturers, cascading tariffs threaten the integrated North American auto industry, and retaliation punishes exporters like farmers. Combined with regressive tax cuts, she argues, tariffs shift the tax burden from the rich to the poor and middle class — while executive control over exemptions invites corruption and patronage.