Photograph Source: The White House – Public Domain

A threatened tariff that is never implemented does not hurt the economy as much as a threatened tariff that is actually implemented. That simple point seems to have eluded Matthew Lynn, a financial columnist whose Washington Post column’s title told readers, “Economists were wrong about tariffs. They need to figure out why.”

While I agree that economists do tend to over-react to tariffs, and oversell the benefits of lowering them, the simple reason economists were wrong is that the tariffs Trump threatened on April 2, “Liberation Day,” were never implemented.

The tariffs Trump promised us on April 2 averaged well over 20 percent. The current nominal effective tariff rate is 17.9 percent, as calculated by the Yale Budget Lab. The reason for emphasizing “nominal” is that this is the rate we would be paying if companies actually paid the tariff rates Trump puts down on paper for a specific country and item. But the actual rate that companies end up paying is often much less than this.

As Trump advertises, he likes to make deals. So, if CEOs head down to Mar a Lago bearing gifts, they can get lower tariff rates or........

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