Don Boudreaux on Miran on Tariffs

See Musing on Miran. 

"Here’s a letter to the Wall Street Journal.

Editor:

Stephen Miran attempts to justify Trump’s tariffs by insisting that these levies will shift much of Americans’ tax burden onto foreigners and thus enable significant cuts in distortionary domestic taxes (“The Low-Tax Case for Tariffs,” June 27). His case, alas, is a string of howlers.

Consider, for example, his mention of the Congressional Budget Office’s estimate that Trump’s tariffs will raise $4 trillion over the next decade (and overlook the fact that this average annual amount of revenue is a paltry 5.4 percent of current U.S. government spending). Not only does the CBO’s estimate ignore the tariffs’ negative impact on economic growth, most of those tariff revenues will be paid by Americans. Mr. Miran conveniently leaves unmentioned the overwhelming amount of empirical research showing that foreigners are paying only a tiny fraction of Trump’s tariffs – by one credible estimate only four percent.

It must also be said that the greater the burden of the tariffs that is shifted to foreigners, the lesser are the price increases that Americans pay for imports and, hence, the more muted are the tariffs’ protective effects. Yet these protective effects are ones that Mr. Trump and other tariff supporters, including Mr. Miran, routinely cite as core justifications for the tariffs.

This inconsistency in his case for tariffs is itself sufficient to discredit all that Mr. Miran says on the matter."