Manhattan Institute’s Jessica Riedl on Tariff Revenues: “I Don’t Think This Has Proven Tariffs Work”
FIRING LINE: Conservative economist Jessica Riedl discusses the impact of Trump’s tariffs and trade deals, the cost of his tax cuts, and potential entitlement reforms. She assesses the Republican Party’s shift toward populism and the threat posed by rising debt.
MARGARET HOOVER, HOST: So “The Wall Street Journal” reported this week that the US economy is, quote, “regaining its swagger.” Consumer confidence supposedly is up. Fears of recession seem to be fading. When President Trump began to impose tariffs, many experts, you included, predicted disaster. And Vice President JD Vance recently posted on X, quote, “It’s almost like the economics profession doesn’t fully understand tariffs.” So were the experts like you wrong? JESSICA RIEDL, MANHATTAN INSTITUTE SENIOR FELLOW: No, most of the tariffs were pulled back. When Trump announced his Liberation Day tariffs, the market dropped 20 points, 20 percentage points. Moreover, we saw that in the first quarter, the economy shrank. HOOVER: Yeah. RIEDL: This caused the president to finally panic and create a pause on his tariffs. Markets responded to the pause, they became more optimistic, and this quarter is looking a little bit better. However, most economic forecasts assume that as the tariffs are gradually reimposed, as we’re seeing now, we’re gonna see less growth the rest of the year. So I don’t think this has proven tariffs work. I think we’ve proven that stopping tariffs works. HOOVER: Well, President Trump did delay most of the tariffs as you point out. The effective tariff rate is still the highest in the United States now since 1910. Inflation did tick up slightly since June. Is this a sign of what could come if these tariffs remain in place and more tariffs are added? RIEDL: If more tariffs are added, I expect economic stagnation. It’s not gonna totally put the economy into a recession by itself, but we are going to grow more slowly. We are gonna have higher prices. We are gonna have higher interest rates. You know, last month, inflation ticked up to its highest rate under President Trump. If you’re worried about inflation, President Trump’s economic agenda should really concern you. The tariffs are inflationary. Immigration restrictions are inflationary. Tax cuts, spending hikes are inflationary, and through it all, the president is trying to get the Federal Reserve to artificially lower interest rates, which is also inflationary. After beating Joe Biden on inflation, he’s doubling down.
