Even Trump Doubts His Tariffs
Here’s a letter to the Wall Street Journal
Editor:
Pres. Trump, as you report today, is calling on the Fed to lower interest rates (“Trump Urges Powell to Cut Interest Rates”). One wonders why.
Mr. Trump boasts that his high tariffs will attract to the U.S. a great deal more foreign direct investment and restructure the global trading system in a way that will supercharge America’s economy. If he’s correct, artificially lower interest rates from the Fed aren’t needed to encourage business investment and consumer spending; his tariffs alone should do the trick. Indeed, investors – always with their eyes on the future – would have quickened their pace of investment in the U.S. the moment the president announced the details of his ‘liberating’ tariffs. But of course the opposite happened.
Mr. Trump’s call for lower interest rates proves that even he doesn’t believe his hype about his tariffs. He’s now asking the Fed for easy money to paper over his folly.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
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