Tyler Cowen — The Free Press‘s new eminence grise — thinks about tariffs like the economist that he is; for example:
Like a game show host, Trump announced a series of tariff rates on many of America’s major trading partners.
How did he come up with the rates?
It seems by a crude formula: A given nation’s trade deficit with the U.S. divided by that nation’s exports to the U.S.
There is a base rate of 10 percent, to be applied to the UK, Costa Rica, and some other friendly nations. For India, it is 26 percent For Japan, it is 24 percent. For the European Union, it is 20 percent.
The most incomprehensible are those on Vietnam (the new tariff rate is 46 percent); Sri Lanka (44 percent); South Korea (25 percent); Cambodia (49 percent); and Taiwan (32 percent)….
Cowen goes on and on, citing seemingly authoritative statistics and ending up where a “good” economist should: tarrifs bad (like Orange Man). The upshot, according to Cowen, is that
we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances. The tanking of the stock market, and other possible asset price repercussions, may tip America into recession and increase joblessness.
What really matters — and Cowen has no more insight into this than the Man in the Moon — is how foreign governments react to Trump’s announced tariffs, and what Trump does in response to those reactions.
Cowen’s doom-saying merely reveals his anti-Trump bias. In that respect, his eminence is just another pundit.
Politics and Prosperity 