When Policymakers Ignore Economists’ Warnings the Results Have Historically Been Catastrophic
History regularly shows that basing economic policy upon ideology, hunches, and gut instinct, rather than on sound economic analysis, is a recipe for disaster. When policymakers have ignored well-established economic principles and instead tried to upend the status quo without good reason, the results have been catastrophic.
That bodes poorly for President Donald Trump’s tariff policy, which experts warn will both raise prices and lead to an economic slowdown as other economies impose reciprocal tariffs on American exports. Given the historical experience it is worrying to hear economists argue that Trump’s tariffs have raised the odds of stagflation—heightened inflation and recession—to a level not seen in the last half century. Whether he backs off from tariffs or doubles down, the damage to domestic and international confidence in the U.S. may have already been inflicted.
