Bifalgorithm post

Hi, I'm Kimberly Clausing, the Eric Zolt Professor of Tax Law and Policy here at UCLA School of Law. Tariffs are in the news a lot these days, in part because President Trump is considering using them far more broadly than they've been used in the past. He's really suggesting tariffs as a fiscal policy tool, as a way for the government to raise a lot of revenue to pay for things like tax cuts and other fiscal priorities. So that makes it really important to understand what tariffs do. Well, tariffs are a tax, first of all. They're a consumption tax. They fall disproportionately on poor and middle income people because poor and middle income people spend more of their income each month on everything, but also on imported goods. Tariffs make imported goods more expensive, but they also make those goods that compete with imports more expensive as well. A less appreciated fact about tariffs is that they can make it harder to produce in the United States. You might think tariffs would help production of the goods that are tariffed. You put a tariff on steel, it helps steel production, but it also hurts the production of other goods that use steel as an input, things like cutlery or cars. And it turns out the majority of our imports are intermediate goods. So when we make those goods more expensive, we also make producing in the United States more expensive. And that alongside retaliation from our trading partners and the deterioration in international relations make tariffs a very difficult tool to use and potentially quite misguided.

Hi, I'm Kimberly Clausing, the Eric Zolt Professor of Tax Law and Policy here at UCLA School of Law. Tariffs are in the news a lot these days, in part because…