Talk to anyone in Trumpland, and you’ll hear that America is winning the trade war. “The economic burden is falling vastly more on them than on us,” proclaimed the President’s chief economic adviser Larry Kudlow in early August as the conflict escalated. But if you look past the rhetoric and crunch the numbers, a strikingly different picture emerges. The more Trump ratchets up tensions, the more he hurts the U.S. economy. By forcing U.S. companies and consumers to pay far more for everything from sneakers to steel, Trump is inflicting a heavy price that could plunge the country into recession.
There are two issues: First, the way the President has structured his tariffs is creating what economists refer to as “deadweight” losses that threaten GDP growth (more on that later). Second, China has cannily avoided such pitfalls by being far more judicious in its tariff strategy.
