A growing chorus of economists are warning of the financial repercussions from President Donald Trump’s tariff policies.
“I call it policy by petulance,” Jonathan Gruber, head of the economics department at MIT, told Boston Public Radio on Thursday.
Gruber said the outcry is less about differing political ideology over tariffs, and more about the specific way Trump is using them.
“The point is that every economist who is being open and honest in their thinking says that you would never want to do tariffs the way Trump’s doing them,” said Gruber.
He explained that tariffs can be useful to promote domestic industries or as a geopolitical tool.
But Gruber said Trump’s tariffs aren’t achieving either of those goals. He offered China as an example. The Trump administration has implemented tariffs as high as 245% on goods from China. Gruber said those tariffs won’t help bring manufacturing back to the United States, because Trump is effectively taxing the inputs to manufacturing more than the outputs.
“If you’re a U.S. manufacturer making laptops but you want to buy a battery that’s made in China so you can make your laptop, there’s a 145% tariff. Is that going to promote manufacturing? No,” Gruber said. “It’s going to mean we can’t make stuff in the U.S., so let’s buy the laptop from China.”
In terms of using tariffs as a geopolitical tool, Gruber said Trump is also failing at that goal because he’s “picking a fight with a much more disciplined country” without any coordination with other trade allies.
The Trump administration on April 15 said that the “ball is in China’s court” to strike a deal to end the trade war.
