I'm not an economist, but I think the theory has merit. I don't think the execution does, if only because we almost certainly only have 4 years until the tariffs are mostly reversed. The complete lack of long-term planning is a major failure of out political system compared to places like China.
If I were Trump, I instead would have pushed congress to take away the power of tariffs back from the presidency and make something like the Fed to manage them instead, with some checks added in. I normally don't like unelected officials making policy like that but in this case I don't see what else would work. As we've seen, broad tariffs are very unpopular even if they might be necessary, and we'd need them to have the potential to stick around much longer for them to be effective.
That said, I'm willing to bet this will finally put the nail in the inflation coffin. Taking money away from consumers and "burning it" by returning it to the government is the best way to deal with inflation.
> If I were Trump, I instead would have pushed congress to take away the power of tariffs back from the presidency and make something like the Fed to manage them instead, with some checks added in. I normally don't like unelected officials making policy like that but in this case I don't see what else would work. As we've seen, broad tariffs are very unpopular even if they might be necessary, and we'd need them to have the potential to stick around much longer for them to be effective.
The power of the tariff is typically reserved for Congress; the executive has declared an emergency giving itself that power, while Congress (specifically the House) has abdicated its responsibility by redefining "legislative days" to extend the length of the emergency.
> That said, I'm willing to bet this will finally put the nail in the inflation coffin. Taking money away from consumers and "burning it" by returning it to the government is the best way to deal with inflation.
Long term, maybe; short term, it'll spike inflation as the price of both raw materials and finished goods will rise to account for the tariffs.
> That said, I'm willing to bet this will finally put the nail in the inflation coffin. Taking money away from consumers and "burning it" by returning it to the government is the best way to deal with inflation.
Nope. Tariffs are associated with higher inflation, as consumers have to pay more. Over long term, if tariffs depress the economic growth and cause a recession, they indeed _might_ lower the inflation.
There's inflation and there's inflation, and it's unfortunate we don't have separate terms.
If you had inflation typical of what we had during/after COVID with our economy being too hot with too much money floating around, tariffs would absolutely help. Preferably they'd be tariffs just on consumer products, and not things used for manufacturing. You'd raise them for a time and then lower them.
It's essentially the same thing as raising interest rates. You're taking money out of the economy.
If I were Trump, I instead would have pushed congress to take away the power of tariffs back from the presidency and make something like the Fed to manage them instead, with some checks added in. I normally don't like unelected officials making policy like that but in this case I don't see what else would work. As we've seen, broad tariffs are very unpopular even if they might be necessary, and we'd need them to have the potential to stick around much longer for them to be effective.
That said, I'm willing to bet this will finally put the nail in the inflation coffin. Taking money away from consumers and "burning it" by returning it to the government is the best way to deal with inflation.