When Professor Krugman focuses on economic issues, there is no one better (especially on trade)… This is from his column in The NY Times, here:
”In the short run, a tariff is a tax. Period. The macroeconomic consequences of a tariff should therefore be seen as comparable to the macroeconomic consequences of any tax increase. True, this tax increase is more regressive than, say, a tax on high incomes, or a wealth tax. This means that it falls on people who will be forced to cut their spending, and is therefore likely to have a bigger negative bang per buck than the positive bang for buck from the 2017 tax cut. But we’re still talking, at least so far, about a tax hike that is only a fraction of a percent of GDP.
This means that it’s hard to justify claims that the trade war, at least what’s currently in the pipeline, will cause a global recession.“
”Maybe the larger point here is that there tends to be a certain amount of mysticism about trade policy, because the fact that it’s global and touches on one of the most famous insights in economics, the theory of comparative advantage, gives it an amount of mind space somewhat disproportionate to its actual economic importance. Yes, trade policy is important; but in terms of the strict economics it’s not more important than health policy, or fiscal policy, or policy in general.”