Haroon Bhorat
haroonbhorat.bsky.social
Haroon Bhorat
@haroonbhorat.bsky.social

Professor of Economics
University of Cape Town
South Africa

Economics 48%
Political science 11%

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Reposted by Haroon Bhorat

Reposted by Haroon Bhorat

How can tariffs improve welfare? Your country needs market power.

A quick explainer below 👇🏻

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Trump's claim that foreigners will pay the tariffs in full. They assume a small but positive passthrough indicating that domestic prices will rise by 25% of the tariffs.

Reposted by Haroon Bhorat

But of course this equation and calculation are a travesty. It is a silly attempt to provide a veneer of respectability to a nonsensical, arbitrary, and ad hoc political decision. Whoever produced this (and indeed all the economists working for Trump) should be embarrassed of themselves.

Reposted by Haroon Bhorat

Their use of elasticity is inconsistent and would not pass an undergraduate test (where is the price effect on the value of imports?) The assumption that exports will be unaffected is crazy. Note also that their (necessary) assumption that domestic import prices will rise contradicts +
This is what Trump's "economists" say about how they calculated the "reciprocal" tariffs. Don[t be fooled by the equation. They commit countless crimes against economics. ustr.gov/issue-areas/... +
Reciprocal Tariff Calculations
Executive Summary Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners. This calculation assumes that pe...
ustr.gov

Reposted by Haroon Bhorat

Trump’s new tariffs are an abomination. It’s not just the economics that is backwards. It’s also the geopolitics/national security angle. Countries have always used trade for geopolitical reasons. But it’s by opening your market to other nations that you get them to align with you, not by closing.

Reposted by Haroon Bhorat