Brent Neiman, a prominent economist and professor at the University of Chicago’s Booth School of Business, has unwittingly stepped into the political and economic turmoil ignited by President Donald Trump’s tariff policy. This controversy began when the Trump administration referred to a 2021 academic paper he co-authored, claiming it justified the hefty new tariffs, a point Neiman strongly disputes, citing gross miscalculations in the figures used.
Neiman’s 2021 paper, titled “Tariff Pass-Through at the Border and at the Store,” was co-authored with esteemed economists, including Alberto Cavallo from Harvard and Gita Gopinath from the IMF. The US Trade Representative’s office used this paper as a foundation for the tariffs introduced by Trump. However, Neiman clearly states his disapproval, asserting, “I disagree fundamentally with the government’s trade policy and approach,” suggesting that the calculated tariffs should potentially be reduced to a quarter of the proposed amounts.
Expressing his disbelief at the tariff rates revealed, Neiman recounted his reaction in a New York Times op-ed, stating, “Gosh, how could those numbers be so high?” He later discovered that the methodology employed from his research was misapplied, resulting in inflated tariff figures. Neiman noted, “I think they grabbed the wrong number from our research,” illustrating how this error led to exaggerated deficit calculations.
Criticising the Trump administration’s objective of eradicating bilateral trade deficits through tariffs, Neiman highlighted the unrealistic nature of this goal: “Trade imbalances… can emerge for many reasons that have nothing to do with protectionism.” He explained that varying consumption patterns reflect natural resources and comparative advantages, not unfair competition.
Calling for a complete abandonment of the tariff policy or at the very least, a significant recalibration, he suggested that the administration should divide its results by four to achieve more accurate figures. Despite his political experience as a former official in the Biden administration’s Treasury Department, Neiman maintains there is no connection to Trump’s team.
The tariffs, announced on what Trump termed “Liberation Day,” consisted of a 10% duty on all imports, with higher rates on specific goods such as Italian coffee and Japanese whisky. This bold move aimed to counter foreign trade barriers and invigorate US manufacturing, leading Trump to proclaim on Truth Social, “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN.” However, the announcement prompted a swift market decline and widespread bipartisan critique, triggering fears of an impending financial crisis.
Brent Neiman, a University of Chicago economist, has been drawn into a debate regarding Trump’s tariffs, which he argues are based on misapplied methods from his academic work. He contests the inflated calculations and the objective to eliminate trade deficits through tariffs, suggesting a need for recalibration or complete policy dismissal. Neiman’s insights highlight the complexities of trade economics and the importance of accurate data in policymaking.
In conclusion, Brent Neiman’s critique of the Trump administration’s tariff policy underscores significant miscalculations that could lead to exaggerated economic consequences. He firmly believes that the foundation for these tariffs was not only incorrect but fundamentally flawed, urging for a recalibration or complete overhaul of the tariff strategy. As a seasoned economist, Neiman insightfully challenges the rhetoric surrounding trade imbalances and highlights the complexities of international trade dynamics, advocating for a more informed and measured approach.
Original Source: www.livemint.com
