Fact Check: tariffs are good for the country that puts them on other countries

Fact Check: "Tariffs are good for the country that puts them on other countries"

What We Know

The claim that "tariffs are good for the country that puts them on other countries" suggests that imposing tariffs will benefit the economy of the country implementing them. However, evidence indicates otherwise. According to the Penn Wharton Budget Model, President Trump's tariffs are projected to reduce long-run GDP by about 6% and wages by 5%, leading to significant economic losses for households. A middle-income household could face a lifetime loss of approximately $22,000 due to these tariffs.

Furthermore, the Budget Lab found that the tariffs would raise the price level by 1.0-1.2%, resulting in an average consumer loss of $1,600 to $2,000 per household in 2024. In the long run, the U.S. economy is expected to be persistently smaller by 0.3-0.4%, translating to an annual loss of $80-110 billion.

Additionally, tariffs are characterized as regressive taxes, disproportionately affecting lower-income households, which could incur losses between $900 and $1,100 (source-2). This indicates that the economic burden of tariffs does not fall evenly across the population.

Analysis

The evidence presented from multiple sources indicates that tariffs do not yield the positive economic outcomes claimed. The Penn Wharton Budget Model highlights that while tariffs may generate revenue, they simultaneously lead to a decrease in GDP and wages, suggesting that the overall economic impact is negative. The projected revenue from tariffs, while significant, does not compensate for the broader economic decline and the increased cost of living for consumers.

The Budget Lab further supports this by modeling the fiscal and economic effects of tariffs, showing that they lead to a decrease in real GDP and increase the cost of goods for consumers. The analysis indicates that the short-term revenue gains from tariffs come at the expense of long-term economic health, as they discourage investment and reduce international capital flows.

Moreover, the potential for retaliatory tariffs from other countries can exacerbate these negative effects, leading to trade wars that further harm the economy. The Harvard Kennedy School explains that tariffs can create economic policy uncertainty, which tends to depress economic activity by causing businesses and households to delay investment and consumption decisions.

In evaluating the reliability of these sources, both the Penn Wharton Budget Model and the Budget Lab are reputable institutions known for their economic analysis. Their methodologies are grounded in empirical data and economic theory, making their findings credible.

Conclusion

The claim that "tariffs are good for the country that puts them on other countries" is False. The evidence indicates that while tariffs may generate short-term revenue, they lead to significant long-term economic drawbacks, including reduced GDP, lower wages, and increased costs for consumers. The overall impact of tariffs is detrimental to the economy of the country imposing them, undermining the assertion that they are beneficial.

Fact Check: tariffs are good for the country that puts them on other countries