If Trump’s Tariffs Are So Bad, Where’s the Recession?
Donald Trump’s trade policy is in danger of demonstrating the truth about one of those old definitions of an economist: someone who sees something working in practice and explains why it will never work in theory.
We have been told, by adherents of diverse creeds of the dismal pseudoscience, that the president’s sweeping tariff plans would be a short route to economic disaster.
In 1849, the historian and philosopher Thomas Carlyle referred to economics as the “dismal science.”
Economics may be dismal, but it is not a science
https://internetional.se/aztopics.htm#economictheory
Having broken most of the rules of politics, has Mr. Trump really smashed one of the supposedly iron laws of economics too?
There are three possible answers: First, it’s too early to tell.
Which leads us to the second possibility. The U.S. is a relatively closed economy, with imports accounting for less than 15% of gross domestic product.
En viktig faktor är att USA har en liten andel utrikeshandel. I Sverige med stor utrikeshandel ger en minskad konsumtion en stor effekt på handelsbalansen. Så icke i USA.
Det behövs därför en sänkning av dollarkursen för att göra den behövliga sänkningen av konsumtionen mindre.
https://englundmacro.blogspot.com/2025/07/klas-eklunds-tulipanaros-usa-tullar-och.html
So third, and tantalizingly, perhaps the conventional wisdom is wrong. Federal tariff revenue up to $300 billion a year will produce gains for Americans.
The relative advantage of doing business in the U.S. may, as promised, start to be reflected in stronger inward investment flows
At this point, only the first answer can be given in confidence: It is too early to tell.
The 2007-08 global financial crisis and its aftermath shattered faith in the post-Cold War economic certainties
Collapsing faith in the democratic institutions of the West in the years since has shattered similar faith in the enduring supremacy of Western liberalism.
If the world’s largest economy can run supposedly discredited economic policies and still thrive, the policy orthodoxies of most of the past half century will have been shattered too.
The rising voices of those who argue for a nationalist, statist, corporatist governing program will be able to add a dose of empirical evidence to their ideological arguments, as theory once again races to catch up with practice.
Gerard Baker Wall Street Journal 28 July
Simple Economic Explanations Keep Breaking Down
https://englundmacro.blogspot.com/2024/10/simple-economic-explanations-keep.html
I now claim to coin the term "balance sheet boom".
When shares och house prices rise many, but not all, are, or at least feel, richer. They feel free to choose and free to spend.
That may go on longer than you can stay solvent.
Rolf Englund 7 October 2024
https://englundmacro.blogspot.com/2024/10/balance-sheet-boom.html
What is the “Washington Consensus? Did it fail?
https://englundmacro.blogspot.com/2021/09/what-is-washington-consensus-did-it-fail.html
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