Interview
Trump economist: tariffs are “a success” | The Economist
- Effective tariff rates are projected to remain in the 9% to 10% range on a narrow set of imported goods, functioning similarly to a consumption tax with a burden mix across stakeholders.
- A pass-through rate of approximately 90% to 92% is expected for 2025 tariffs through February 2026, noting that partial equilibrium studies may fail to capture broader general equilibrium effects on domestic and foreign wages.
- Tariffs combined with fiscal implications are anticipated to reduce the deficit, with initial Congressional Budget Office scores estimating revenue of about 1% of GDP.
- Manufacturing employment is forecast to decrease in 2025 in a manner less severe than 2023 and 2024 declines, followed by an increase in 2026.
- Continued growth in manufacturing value added and productivity is expected to serve as a success indicator for tariff policy, potentially driven by robotics and automation rather than workforce expansion alone.
- Construction growth in 2026, particularly for AI data centers, is projected to precede employment upticks in fabricated metals, transportation, and chemical sectors.
- Companies are expected to respond to tariff policies and supply chain diversification needs by increasing investment within China.
- Additional domestic investment is anticipated beyond data center construction, driven by the combination of tariffs, tax incentives from the "big beautiful bill," and global economic trends.