Tag: foreign affairs

“Foreign manufacturers will have to lower their prices to accommodate tariff rates, Miran believes. If they don’t, then U.S. importers will turn to factories in other markets rather than absorbing the cost of tariffs themselves.
“We can move our demand across borders, but a factory can’t get up and move across borders,” he said.

You might say, his theory is that the customer is always right.

This line of thinking, a theme of his work since before he joined the administration, is an important way Miran’s reasoning diverges from that of most of his fellow economists. Critics point to examples — such as Trump’s tariffs on washing machines in his first term — where consumers seemed to be the ones who paid the price.

The question of who will bear the cost burden of import taxes is an important puzzle piece for gaming out how much inflation will rise and how much growth will slow. It is a particularly critical dilemma for the Federal Reserve, which is trying to decide when to ease off the decelerating economy.”

…

“For this to work, foreign firms have to believe that, unless they capitulate, U.S. companies really will relocate their supply chains elsewhere, Miran told me. That’s one of the many tricky parts for proponents of Trump’s agenda — and Miran conceded as much.

“The truth is that for a lot of products, there’s not a credible alternative for a supply chain available instantaneously, right?” he said.

The recalibration, in other words, will take some time.

And that time could come at a price for the economy, as Trump’s shifting tariffs and fluid negotiations leave businesses hesitant to take action. If firms knew where tariffs would land, they could make investment decisions — on where to build factories, on what size workforce they need, on whether they need to change their business model. In the meantime, many executives are frozen in place, a paralysis that itself could take a bite out of growth.

Right now, manufacturers have been scaling back production as new orders dry up, and confidence in business conditions among CEOs collapsed during the second quarter at its fastest pace in roughly half a century.

Miran was straightforward about acknowledging that policy uncertainty is a challenge, repeatedly suggesting that there could be volatility — in growth, in prices — ahead.”

https://www.politico.com/news/2025/06/18/trump-economist-stephen-miran-trade-war-00410450