What are Trump's tariffs and why are they controversial?
From New York Times Opinion, this is The Ezra Klein Show. So scale of one to 10, how liberated are you feeling? Because we just had Donald Trump's big day of liberation, where he announced a huge package of tariffs, larger by far than markets were expecting, which led markets to lose a lot of value in the hours right after. They were also more confusing than people were expecting.
He had suggested in the campaign a flat tariff of 10 to 20% on all important goods, maybe something bigger on China. But this was very different, different numbers for basically every country. Then there was a column listing the tariffs that they had on us, and that column was simply wrong. So what is going on here? Why is Donald Trump absorbing this much economic pain?
Why is he risking domestic recession, a global recession, for this package of policies that almost every economist would tell you does not really make sense? I wanted to talk to my former colleague, Paul Krugman, about this. Paul is a Nobel Prize-winning economist with a focus in trade. He was a columnist here at the New York Times for 25 years, and he's been writing an excellent sub-stack called
where he's been tearing into the theory behind this kind of tariff policy, but then also the very strange reality, the practical tariffs that have now been announced and trying to understand what led to this package instead of one of the packages that might have more cleanly accomplished the goals that Donald Trump and the people around him say they are seeking.
As always, my email, EzraKleinShow at NYTimes.com. Paul Krugman, welcome back to the show. Hi, good to be on again. So let's just start with what Donald Trump actually announced on Liberation Day.
Wow. I think most people thought it was going to be some kind of across-the-board tariff, the same on everybody, or maybe two or three different types of tariffs. Instead, he announced this whole complicated different tariff for every country at levels much higher than the smart money or the money that thought it was smart was betting, something like 23% average tariff now, which is huge.
It's higher than U.S. tariffs after Smoot-Hawley was passed. And trade is a much bigger part of the economy now than it was in 1930. So this is the biggest trade shock in history.
How does the tariff country by country seem to have been calculated?
Okay, that was interesting because on the first thing was, where the hell, sorry, but you know, where the heck are they getting these numbers from?
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