Economist Douglas Holtz-Akin, President of the American Action Forum and former director of the Office of Management and Budget, shed light on the complex issue of tariffs and their economic implications during a recent discussion.
When asked about the impact of tariffs on Americans, Holtz-Akin explained that tariffs essentially function as a national sales tax, affecting the sale of goods to American consumers. While there is a possibility that foreign suppliers could absorb some of the costs, evidence suggests that the burden often falls on U.S. purchasers, leading to potential tax increases and economic strain.
Reflecting on past tariff implementations, particularly during the Trump administration, Holtz-Akin highlighted how tariffs on items like washing machines, steel, and aluminum had mixed economic outcomes. While these tariffs were intended to protect domestic industries, they often resulted in negative repercussions for the overall economy, offsetting gains from tax reforms and deregulation.
Addressing the question of whether tariffs can be justified for political or geostrategic reasons, Holtz-Akin acknowledged the argument but emphasized the need for a critical evaluation of their effectiveness. He pointed out that past attempts to use tariffs as a tool against countries like China did not yield the desired outcomes, raising doubts about the efficacy of such measures.
In conclusion, Holtz-Akin underscored the importance of learning from historical experiences with tariffs and exploring alternative strategies to address economic challenges. He expressed disappointment in the continuation of certain tariffs under the Biden administration and called for a reevaluation of protectionist policies to foster sustainable economic growth.
