September 7, 2025
Mr. Scott Bessent
Secretary, U.S. Treasury
Washington, DC
Mr. Bessent:
This morning on “Meet the Press” you confidently claimed that Pres. Trump’s tariffs are sparking a manufacturing revival in the U.S. Minutes later, and with equal confidence, you claimed that these tariffs are not causing, and will not cause, Americans to pay higher prices. Companies, you assert, are ‘eating’ the tariffs by not passing along their costs to consumers in the form of higher prices.
Let’s here ignore the fact that the data contradict both of your claims (a reality that you evade by insisting that the data aren’t “good”). Instead, let’s examine the internal (in)consistency of your argument.
If – as Mr. Trump and protectionists have long asserted – U.S. manufacturing has been “hollowed out” by unfair trade, the only way that tariffs can increase U.S. manufacturing output is to raise the prices paid by American consumers in order to enable American manufacturers to raise their own prices to ‘fair’ levels that allow them profitably to increase their outputs. But if, as you also insist, the tariffs aren’t raising the prices paid by American consumers, American manufacturers face the same prices that prevailed before the tariffs. With no tariff-induced hike in prices, American manufacturers will not increase their outputs.
Either the tariffs do raise prices paid by American consumers, thus allowing some American manufacturers to profitably increase their outputs, or the tariffs don’t raise prices paid by American consumers, thus providing no opportunity for American manufacturers to profitably increase their outputs.
Which is it? It must be one or the other; it cannot be both.
This point isn’t one of ideology, politics, or ‘elite’ opinion. It’s a point of simple logic that not even a successful politician or investment banker can escape. You inadvertently insult Americans’ intelligence by insisting on the truth of both of your claims.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
