On the morning after the 2016 presidential election, CNBC interviewed Peter Navarro, who had been an economic adviser to the Trump campaign and would soon join the administration to advise the president on trade and manufacturing policy. Navarro outlined President Trump’s economic plans: cutting taxes, reducing regulation, cutting energy costs and reforming trade. He predicted strong growth and a Dow moving past 25,000 based on these pro-growth policies.
The Trump administration has delivered on every one of those things, but you’d never know that from the mainstream media. Today, it’s hard to turn on the financial news, open a business paper or browse an investment website without seeing some doomsayer predicting the impending collapse of the U.S. economy and equity markets because of the latest tariff or presidential tweet. When the markets invariably resume their upward trends the next day, it’s crickets.
With each drop, tariffs are blamed, and sometimes, the blame is more specifically laid at the feet of Navarro, who has been a chief architect of the president’s trade policies. As the economy hummed along, with historically low unemployment, the Wall Street Journal recently suggested we might see a “Navarro recession.”
We’ve also heard the constant refrain that the tariff burden is borne by American consumers. In fact, while economists differ on the effects of the tariffs, there is considerable evidence that they are having the desired effect. Modeling by European economists Benedikt Zoller-Rydzek and Gabriel Felbermayr concluded that, although U.S. consumer prices for affected Chinese products will rise by about 4.5%, Chinese firms will pay approximately 75% of the tariff burden. And as of the end of August, the treasury had collected more than $25 billion in tariffs from China.
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