Simon Evenett Marc-Andreas Muendler
Until the late 19th century, states raised most of their government revenues from import tariffs. This column asks whether the practice could work today. A side effect of taxes is that they discourage the economic activity that they are assessed on. Tariffs are taxes on imports and no different: they shrink trade. The authors allow tariff revenues to change an economy’s savings and therefore the trade balance, as the US administration intends. Then the displacement effect of import tariffs is so strong that tariff revenues cannot plausibly fund more than a few weeks of annual US government spending.
Πηγή: Voxeu