There's been a lot of debate about what economic theory says regarding tariffs. Drawing on my research with quantitative economic models, here's a thread explaining the textbook logic for why "tariffs are bad" for revenue generation. 🧵 Let’s dive in!

Some data worth pondering as the conversation shifts to "reciprocal" tariffs.

In the discussion of tariffs, one of the hardest things to convey to the general public is the argument that tariffs on our imports always end up harming our exporters, that is the workers and businesses in the US who are most successful at producing what the world likes

This is truly amazing. The Deputy White House Press Secretary is claiming that I'm wrong, and that the "tariff rates" on Trump's chart were calculated by "literally" measuring every country's tariffs and non-tariff trade barriers. To prove it, he screenshots the formula the USTR

Impressed the crack White House economic team not only found the Heard and McDonald Islands—an uninhabited Australian territory which is a two week sail from the mainland requiring a permit to visit—but that they managed to figure out the optimal retaliatory tariff to impose on

88% of the variance in bilateral trade imbalances is not due to asymmetric trade costs (e.g., tariffs, NTBs, etc.). Thus, it is perhaps not correct/fair to use bilateral trade imbalance to calculate asymmetric trade costs. cepr.org/voxeu/columns/… VoxEU

Grundpremissen för USAs nya tariffer, att man vill eliminera alla handelsunderskott, är felaktig. Men även givet det så verkar uträkningen innehålla ännu fler fel, exempelvis tveksamma parametervärden från den forskningslitteratur man baserar sin policy på.

I do not think that the government's formula is an appropriate way to think about reciprocal tariffs. And it is unclear what the note references or doesn’t from my research with Cavallo et al. But I believe our work suggests the value for the “elasticity of import prices to

Här förklarar Neiman i mer detalj varför Trumps egen tullformel resulterar i tullar som bara är en fjärdedel så stora som de som nu införs: nytimes.com/2025/04/07/opi…