As I pen this reflection, it has been roughly two weeks since the announcement of the “Liberation Day” tariffs. While it’s a given that political economic models rarely dazzle (just take a glance at the plethora of “economic impact studies” that seem to conveniently align with local political aspirations), the assessment released by the USTR and CEA is particularly underwhelming. It resembles a last-minute undergraduate essay hastily compiled after a frantic search on Google Scholar, rather than an insightful scientific analysis. Critiques regarding its numerous shortcomings have already been voiced by myself and others. Moreover, the subsequent defense put forth by Council of Economic Advisers chair Stephen Miran has been lackluster, marked by repeated misapplications of citations and reliance on discredited models to bolster the tariffs. What we have here are merely post hoc rationalizations for a policy that seems more about fulfilling desires than addressing actual challenges.
Nevertheless, I choose to maintain a measure of optimism, spotting a few silver linings amidst this convoluted situation. As Frederic Bastiat wisely noted, “[T]he worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.” The natural corollary suggests that the best fate for a flawed cause is to receive similarly poor defense. Thus, one potential positive outcome of this poorly conceived tariff initiative could be the continued decline of protectionist and mercantilist ideologies. Protectionism has struggled to maintain popularity, as evidenced by a February Gallup poll indicating that a staggering 81% of Americans view trade as a pathway to economic growth, with only 14% seeing it as a threat. This sentiment even resonates among Republicans, with 78% believing trade presents opportunities. Given the stock market’s tumultuous downturn and general chaos experienced in early April, it’s reasonable to suspect these attitudes remain unchanged, or perhaps even more skeptical regarding the Administration’s policies. This silver lining may indeed herald the waning popularity of protectionism, especially considering its most prominent advocate’s lackluster defense. If Trump dedicates more resources to defending this position, he might be diverted from even more detrimental policies.
However, significant grey clouds accompany this silver lining. By endorsing this report, the Council of Economic Advisors has irreparably damaged its credibility. Research consistently shows that when experts present overly precise, low-quality information without discussing alternatives, public trust erodes. This holds true even if their claims eventually prove accurate. While accuracy is crucial, what matters more in effective communication is transparency. The economists backing the tariff scheme, particularly Steven Miran, have been anything but transparent. Miran has faced accusations of misrepresenting or outright falsifying the information he cites. Such actions undermine the authority that the CEA has historically held as a reliable source of expert advice, potentially leading to the rise of economic “flat-earthism.”
We witnessed a similar scenario in public health during the COVID-19 pandemic. Notably, Fauci and colleagues often failed to provide straightforward information regarding COVID, vaccines, or other crucial matters. Fauci even admitted to misleading the public to achieve specific goals. The fallout was a dramatic decline in confidence in public health authorities and the emergence of anti-vaccine sentiments. Their inept defense of public health led to disastrous consequences, a trend I fear may repeat itself in my own field.
A discerning reader will recognize that the two effects I’ve discussed are inherently contradictory; I cannot predict which will ultimately prevail. To continue my metaphor, sometimes the ominous clouds merely obscure potential rain, allowing the silver lining to shine through. Other times, the silver lining is overshadowed by a formidable and destructive storm. I remain hopeful for the silver lining, yet I cannot shake the fear of the impending tornado.
*Note: When I refer to “anti-vaxxer,” I mean it in the literal sense; they are opposed to vaccines. Those who oppose mandates should not be categorized as anti-vaxxers.
