Tag: economics

“Tariffs don’t conjure consumer demand out of thin air. Americans were buying plenty of washing machines, clothing, and steel before the tariffs. What changes is where some things are made. Production shifts from foreign manufacturers with efficiency or cost advantages to more expensive domestic manufacturers. American producers stand to gain, except when they must pay tariffs to import the materials they need (as is often the case).

But everyone who buys the product pays more. The extra $100 a family spends on a washing machine won’t instead be spent at the restaurant next door, the repair shop, or the shoe store. Real wages—what your paycheck actually buys—fall when the prices of most things rise.

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When Americans buy less from China, it’s true, some of our overseas business competitors lose revenue. But what about the American households losing access to cheaper goods? Or the American producers losing access to cheaper materials and ingredients that make them more competitive?

Both countries take a hit. Serious analysts who favor targeted tariffs for strategic reasons generally acknowledge this tradeoff and argue that the benefits justify the costs. What they don’t claim is that such costs don’t exist.

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Even when firms do absorb some of the hit, the money doesn’t disappear. These companies instead hire fewer people, pay lower wages, invest less or, in industries where profit margins are already thin, hike future prices. The burden just takes a different route to your wallet.”

https://reason.com/2026/02/26/the-4-economic-myths-powering-trumps-new-tariff-push/