Image Source: Pexels

Released today by CEA:

Well first a picture depicting plausibility:

Onto the conclusion:

Strategically targeted tariffs are an important tool to protect economic and international interests of the U.S. However, the potential for a broad tariff to serve as a major revenue raiser in a modern, global economy is limited. Moreover, elevating the reliance of the Federal government on tariff revenue would likely exacerbate long-running trends in income inequality by shifting more of the burden of taxation onto lower-income households. It is also highly like to generate large, negative distortions to the macroeconomy.

And if you thought tariffs didn’t do anything for the trade deficit back under Trump, wait until a 10% general tariff goes into effect…

Figure 1: Net exports to GDP (bold blue), net exports ex-petroleum (green), and current account (tan), all as share of GDP. Trump administration shaded orange, dashed line at start of Section 232 and Section 301 actions. NBER defined recession dates shaded gray. Source: BEA, NBER, and author’s calculations.

More By This Author: