Except we’re not going to slap down a leftist. We’re going to smack a Trumpie who thinks like a leftist.
Or, to be fair, we’re going to slap down a Trumpie – the President’s Press Secretary – who felt compelled to issue a bone-headed tweet because she is in the unfortunate position of trying to defend the indefensible.
To be more specific, she cited an article from Breitbart that cited a new economic study stating that protectionism is historically associated with lower levels of inflation.
But there’s an itsy-bitsy, teenie-weenie problem. The study explained that inflation is lower because the economy suffers, as David Bahnsen’s counter-tweet correctly explains.
By the way, here’s a link to the aforementioned study, which was authored by Régis Barnichon and Aayush Singh.
Here’s a brief excerpt.
During the so-called first wave of globalization —the period of increased global economic integration in trade and finance between 1870 and 1913— as well as during the inter-war period, tariff rates displayed large and fast variations that are reminiscent of the 2025 change. We exploit these variations to learn about the macro effects of tariff changes. …tariff shocks appear to act as aggregate demand shocks—moving inflation and unemployment in the same directions. A possible explanation relies on the effects of uncertainty: a tariff shock creates (or coincides with) an uncertain economic environment, which by itself depresses economic activity by lowering consumers’ and investors’ confidence and puts downward pressures on inflation… Another possible channel is a wealth channel, whereby an adverse tariff shock leads to a drop in asset prices, which then depresses aggregate demand and leads to higher unemployment and lower inflation. We find evidence in support of both channels: in response to higher tariffs, stock prices decline and stock market volatility increases.
And here’s a relevant graphic from the study.
If Ms. Leavitt (or the reporter at Breitbart) had bothered to do a minimum level of research, it would have been obvious the study showed that protectionism is a bad idea.
Assuming, of course, we agree that more unemployment and weaker economic performance are not good outcomes.
Once again: Game, set, match.
Not that we should be surprised. A study I cited in 2019 had very similar results.
P.S. The Fed study also confirms what I wrote earlier this year, which is that protectionism causes higher relative prices for goods hit by the trade taxes, but not overall higher inflation. As Milton Friedman taught us, it’s bad monetary policy that causes inflation, not bad trade policy (or bad fiscal policy, or bad regulatory policy).
