Economist Says Trump Administration Misinterpreted Tariff Study, Advocates for Significantly Lower Rates
photo: Reuters/Scanpix/Leta
In a surprising turn, American economist Brent Neyman, whose research was cited by former President Donald Trump’s administration to justify the imposition of controversial customs tariffs, has publicly stated that his work was misinterpreted. Speaking out on March 6, 2025, Neyman asserted that the tariffs implemented were far larger than his research suggested was warranted.
Neyman,who previously served in the U.S.Treasury Department during president Joe Biden’s administration, co-authored a study published in 2021 analyzing the impact of tariffs on U.S.prices. The study has recently resurfaced, cited in a statement by the U.S. Trade representative’s Office (USTR) last week, as the office attempted to justify Trump-era tariffs that many economists believe pose significant risks to the global economy.
“I completely disagree with government trade policy and approach,”
Brent Neyman, The New York Times
Neyman argued that the USTR’s fundamental error lies in the assumption that trade deficits automatically indicate unfair trade practices by other nations. This perspective echoes long-standing debates in the U.S. regarding trade imbalances and their implications for American jobs and industries.Such as, the U.S. has long had a trade deficit with China, which has fueled accusations of currency manipulation and unfair competition.
The Trump administration, according to Neyman, also misrepresented the study’s findings regarding the expected price increases in the U.S. under the tariff regime.
According to Neyman, the research, conducted with three other scientists, indicated that the prices of imported goods woudl likely increase proportionally to the tariff rate imposed. This is a critical distinction, as it suggests the tariffs’ burden falls primarily on American consumers and businesses who rely on imported goods.
Neyman emphasized a critical point: “The calculated tariffs should be significantly lower. Probably only a quarter of the applied volume.” This statement directly contradicts the scale of tariffs implemented by the Trump administration on goods from countries like China, Mexico, and Canada.
The implications of Neyman’s statement are far-reaching. The Trump administration’s tariffs, implemented under Section 232 of the trade Expansion Act of 1962 (national security) and Section 301 of the Trade act of 1974 (unfair trade practices), led to retaliatory tariffs from other countries, disrupting global supply chains and increasing costs for American businesses. these costs were often passed on to consumers, contributing to inflationary pressures.
as a notable example, the tariffs on steel and aluminum, justified under national security concerns, raised costs for American manufacturers who rely on these materials, impacting industries ranging from automobile production to construction. Similarly, tariffs on Chinese goods, aimed at addressing intellectual property theft and forced technology transfer, affected a wide range of consumer products, from electronics to clothing.
Now, with Neyman’s assertion that these tariffs were based on a misinterpretation of his research, there is renewed scrutiny of the economic rationale behind these trade policies. The Biden administration, while maintaining some of the Trump-era tariffs, has also engaged in negotiations with trading partners to address trade imbalances and resolve disputes.
The Impact of Tariffs on Key U.S. Industries
| Industry | Impact of Tariffs | Example |
|---|---|---|
| Automotive | Increased costs of imported parts, potential for higher vehicle prices. | Tariffs on imported steel raised production costs for U.S. automakers. |
| Agriculture | Retaliatory tariffs from other countries, reduced export opportunities. | China imposed tariffs on U.S.soybeans in response to U.S. tariffs on Chinese goods, hurting American farmers. |
| Retail | Higher prices for consumer goods, reduced consumer spending. | Tariffs on imported clothing and electronics increased prices for American consumers. |
| Construction | Increased costs of building materials, potential for slower construction activity. | Tariffs on imported lumber raised construction costs for new homes and infrastructure projects. |
Recent Developments and Future Outlook
The debate over tariffs continues to evolve. Some economists argue that tariffs can be a useful tool for protecting domestic industries and promoting national security, while others contend that they ultimately harm consumers and businesses by raising prices and disrupting trade.
The Biden administration is currently reviewing its trade policy and considering options for addressing trade imbalances and unfair trade practices. The future of tariffs in the U.S. will likely depend on the outcome of these policy debates and negotiations with trading partners. Any decision regarding trade must consider international competitiveness and the benefits of trade to the domestic economy.
