“What populists don’t understand about tariffs (but economists do)” is the title of a very readable essay by Kimberly Clausing and Maurice Obstfeld of the Peterson Institute for International Economics. Here’s the pullquote:
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Their article is a response to a piece in the Atlantic by self-proclaimed economist Oren Cass. Here’s the TL;DR version:
Cass’s main critique is that economists “consider only the costs of tariffs and not the benefits.” Cass imagines potential benefits of tariffs that he calls “externalities.” In his telling, these include fueling a US manufacturing renaissance, leading to higher middle-class wages and more stable families and communities. He asserts that this manufacturing resurgence will promote research, development, and innovation, leading to economy-wide productivity gains.
While such goals are laudable, an assessment of tariffs as a policy tool must answer three questions:
- How costly are tariffs?
- Would they deliver the desired benefits?
- Would other policy tools be more effective than tariffs?
Our brief answers are:
- Very.
- Negligibly or no.
- Yes.
I urge everyone to read this article, especially if you have doubts about the effects of tariffs.
Oren Cass
Mr. Cass claims to be an economist. A short bio from Wikipedia. (Hyperlinks and footnote marks removed by me.)
Oren M. Cass (born c. 1983) is an American public policy commentator and political advisor. Since 2024 he has served as the chief economist at American Compass, a conservative think tank. He previously worked on the presidential campaigns of Mitt Romney in 2008 and 2012, being described as a “general policy impresario of the emerging conservative consensus on fighting poverty”. Between 2015 and 2019, Cass was a senior fellow at the Manhattan Institute for Policy Research, and the author of The Once and Future Worker: A Vision for the Renewal of Work in America. In February 2020, Cass established American Compass, an organization aimed at the question of “what the post-Trump right-of-center is going to be.”
But what about economics? Again, we turn to Wikipedia:
Cass received a Bachelor of Arts in political economy from Williams College, and was then hired as an associate consultant at Bain & Company. After working at Bain for several years in the firm’s offices in Boston and New Delhi, Cass “took a six-month leave to work on Mitt Romney’s 2008 campaign for the Republican presidential nomination”. Cass then enrolled in Harvard Law School “to deepen his understanding of public policy”, stating of the experience that “law school is a lot of fun if you’re not there to be a lawyer”.
Translation: another lawyer with economics envy. Political economy? A major that is mostly politics and a dash of economics without the mathematics.
