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The levies are also likely to reduce America’s economic output, as has happened before. A 2020 study, based on data from 151 countries, including the US, between 1963-2014, found that tariffs have “persistent adverse effects on the size of the pie,” or the gross domestic product of the country imposing them.
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There are a number of possible explanations for this.
One is that, when tariffs are low or non-existent, the country in question can focus on the kind of economic activities where it has an edge and export those goods and services, Gimber told CNN.
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“If you raise tariffs, you’re not going to see that same level of specialization,” he said, noting that the result would be lower labor productivity. “The labor could be better used elsewhere in the economy, in areas where you have a greater competitive advantage.”
Another reason output falls when tariffs are raised lies in the higher cost of imported inputs, wrote the authors of the 2020 study, most of them International Monetary Fund economists.
Fatas at INSEAD suggested the same reason, providing an example: “So I’m a worker and work in a factory. To produce what we produce we need to import microchips from Taiwan. Those things are more expensive. Together, me and the company, we create less value per hour worked.”
Yet another way tariff hikes can hurt the economy is by disrupting the status quo and fueling uncertainty over the future levels of import taxes. That lack of clarity is particularly acute this year, given the erratic nature of Trump’s trade policy.
Surveys by the National Federation of Independent Business in the US suggest the uncertainty is already weighing on American companies’ willingness to invest. The share of small businesses planning a capital outlay within the next six months hit its lowest level in April since at least April 2020, when Covid was sweeping the globe.
“The economy will continue to stumble along until the major sources of uncertainty (including over tariffs) are resolved. It’s hard to steer a ship in the fog,” the federation said.
Whichever forces may be at work, the IMF, to cite just one example, thinks higher US tariffs will lower the country’s productivity and output.
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During a May 19 town hall meeting with NIH staff members, Jay Bhattacharya, the institute’s new director, equivocated when asked about funding cuts for research into improving the health of racial and ethnic minorities — cuts made under the guise of purging DEI from the government.
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According to a recording of the meeting obtained by KFF Health News, Bhattacharya said the agency remained “absolutely committed to advancing the health and well-being of every population, including minority populations, LGBTQ populations, and every population.”
Research addressing the health needs of women and minorities is “an absolute priority of mine,” he said. “We’re going to keep funding that.” But a study considering whether “structural racism causes poor health in minority populations” is “not a scientific hypothesis.”
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“We need scientific ideas that are actionable, that improve the health and well-being of people, not ideological ideas that don’t have any chance of improving the health and well-being of people,” he said. That comment angered many staffers, several said in interviews. Many got up and walked out during the speech, while others, watching remotely, scoffed or jeered.
Several current and former NCI scientists questioned Bhattacharya’s commitment to young scientists and minorities. Staffing cuts early in the year eliminated many recently hired NCI scientists. At least 172 National Cancer Institute grants, including for research aimed at minimizing health disparities among racial minorities or LGBTQ+ people, were terminated and hadn’t been reinstated as of June 16, according to a KFF Health News analysis of HHS documents and a list of grant terminations by outside researchers.
Those populations have higher rates of certain cancer diagnoses and are more likely to be diagnosed later than white or heterosexual people. Black people are also more likely to die of many cancer types than all other racial and ethnic groups.
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