Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

AI Summary. Economists argue the tariffs will shrink the US trade deficit by making the country an unattractive destination for capital, since foreign capital inflows require a trade deficit. They warn the policies could mark a break for the dollar comparable to the Suez crisis for the British pound, portending higher borrowing costs, less investment and more stagnation.

Oren Cass, Jason Furman, Rebecca Patterson and Lawrence Summers New York Times
Date Posted:

If the more dramatic tariffs swing back into play, @LHSummers warns, “We will get the trade deficit down with the same basic economic force that Venezuela uses, by making ourselves very unattractive as a place to put capital.”

Do tariffs shrink the trade deficit by deterring foreign capital?

Core argument: Economists argue Trump's tariffs would shrink the U.S. trade deficit by the same force Venezuela uses — making the country unattractive as a place to put capital — undoing much of the economy's relative progress over the past generation.

Sledgehammers and delicate machinery are a very bad combination. We will get the trade deficit down with the same basic economic force that Venezuela uses, by making ourselves very unattractive as a place to put capital. That will undo much of the relative progress of the economy over the past generation. You can’t have much-needed foreign capital flow into our country without having a trade deficit. There is a real chance that Mr. Trump’s trade policies will be to the dollar what the 1956 Suez crisis was to the British pound — a dramatic break that ultimately portends higher borrowing costs, less investment and more stagnation.

Takeaways by Macro Roundup® AI

  1. Economists argue Trump's tariffs would shrink the U.S. trade deficit by the same force Venezuela uses — making the country unattractive as a place to put capital — undoing much of the economy's relative progress over the past generation.
  2. Much-needed foreign capital cannot flow into the United States without a trade deficit, according to the economists.
  3. Economists see a real chance Trump's trade policies become for the dollar what the 1956 Suez crisis was for the British pound, a dramatic break portending higher borrowing costs, less investment and more stagnation.

Related Articles:

  • The U.S. Trade Deficit: Myths and Realities — Taxing capital inflows would weaken the dollar but could raise domestic interest rates and depress investment, harming long-term growth, while an interest rate cut absent recession would be inflationary and erode any real depreciation needed to durably improve the trade balance. Fiscal restraint could weaken the dollar and reduce the trade deficit.
  • Pettis On New Round Of American Tariffs — Bilateral tariffs mostly divert trade rather than shrink the overall US trade deficit, because they address neither the internal imbalances driving surplus countries' surpluses nor the US role in accommodating them. After an earlier round of US tariffs, the US deficit with China fell while both the overall US deficit and China's overall surplus rose.
  • Trade Intervention for Freer Trade — The authors argue the United States should counter surplus countries' trade policies either by restricting their goods exports through tariffs or by restricting their capital inflows through taxes, volume limits, reserve requirements, transaction approvals, or investor eligibility rules. They contend capital controls are a more targeted alternative to uniform tariffs, which impose equal costs on more and less mercantilist countries.
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