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An Open Letter to Katherine Tai

Ms. Katherine Tai
U.S. Trade Representative

Ms. Tai:

In a briefing yesterday at the White House, you responded to a question about the higher prices caused by Trump’s tariffs that you “think that that link, in terms of tariffs to prices, has been largely debunked.”

This news is astonishing! It overturns 250 years of economic theory and evidence. You should immediately alert literally every author of economic textbooks – including the Nobel-laureate international-trade economist Paul Krugman – to inform them that their analyses of tariffs are wholly mistaken, because in all of these textbooks tariffs are shown to protect domestic producers only by raising the prices of protected goods and services.

And can you direct me to the work of the mysterious genius who has debunked the idea that, after domestic producers complain about foreign competitors ‘stealing’ their markets with unfairly low prices, the tariffs that are imposed in response to these complaints do not result in higher prices? Is this innovative economic theorist perhaps Donald Trump? After all, he’s on record as claiming that tariffs have little effect on prices. Or maybe thanks for this remarkable intellectual breakthrough are owed to the scholars at Breitbart News who claim to have “shown that tariffs do not raise prices on Americans.” Whoever he, she, or they might be, a discovery this momentous and revolutionary will surely bring them the next Nobel Prize in economics.

Donald J. Boudreaux
Professor of Economics
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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