What You Should Be Reading: April 2025

Welcome back to “What You Should Be Reading,” a monthly blog series in which the Taxpayers Protection Alliance(TPA) realizes that this blog is about a week late. It has been one week of the year in Washington, D.C. during which the temperature is lovely and the humidity has yet to descend. So, here are a few important new works of public policy research that we commend to your attention.

We here at TPA cannot escape tariff talk, and, therefore, neither can you, dear reader. The tariff talk will continue until morale improves. April’s edition includes a pair of excellent studies of protectionism and then — as a reprieve — a debunking of the false consensus that is supposed to have arisen concerning competition policy and digital markets.

Tax Foundation: “How Much Revenue Can Tariffs Really Raise for the Federal Government?”

Once an idea lodges itself in their heads, politicians often prefer simple A-to-B calculations to prove the supposed magisterial goodness of their proposal. Accounting for unforeseen variables and unintended consequences tends to raise inconvenient questions. The answers to those questions suggest that even the most clever of schemes thought up by men of system usually fail. Besides, one really can’t expect the interns to do so much complicated math.

The tendency towards the simplistic has found one of its most maddening instantiations in recent projections for tariff revenues. Tariff revenue will flow so freely, the Trump administration promises, that it will render a federal income tax unnecessary. According to resident White House tariff enthusiast Peter Navarro, protectionist proceeds could reach $6 billion over a decade.

Blinding oneself to the confounding variables does not remove them — it only confounds one’s ability to anticipate and account for them. Demand is what fancy-pants PhD-laden economists call “elastic.” Should a product become 20 percent more expensive, Americans will buy less of it. As Americans begin to source tariffed goods domestically, fewer imports and less tariff revenue will flow in. Moreover, notwithstanding the ideals of free marketeers, foreign governments will not likely allow American protectionism to go unanswered. Retaliation will come. In short, Navarro’s estimates are what those same economists would call “bonkers town.”

Myriad factors suggest far more modest tariff revenues, write Erica York and Alex Durante of the Tax Foundation:

Our analysis of hypothetical universal tariffs of 10 percent, 15 percent, and 20 percent illustrates that though the tariffs would generate revenue — ranging from $2.2 trillion to $3.4 trillion over a decade on a conventional basis — that revenue would diminish when accounting for the broader economic impact.… Our dynamic revenue estimates show a decline in projected revenue due to reduced economic output, lowering expected revenues to $1.7 trillion for a 10 percent tariff, $2.2 trillion for a 15 percent tariff, and $2.6 trillion for a 20 percent tariff. Revenue and US GDP would fall further with retaliation; the total dynamic revenue estimate with retaliation falls to $1.4 trillion for 10 percent universal tariffs, $1.8 trillion for 15 percent universal tariffs, and $2.0 trillion for 20 percent universal tariffs.

For the mathematically disinclined, $2 trillion over ten years falls far short of the $6 trillion Navarro promises — let alone the cumulative revenue supplied by the individual income tax, which came to $1.14 trillion in 2024 alone.

Nor would this revenue make up for the economic costs. York and Durante:

A 10 percent universal tariff would reduce GDP by 0.4 percent in the long run and hours worked by 400,000 full-time equivalent jobs. A 15 percent universal tariff would reduce GDP by 0.6 percent and hours worked by 581,000 full-time equivalent jobs. Finally, a 20 percent universal tariff would reduce GDP by 0.8 percent and hours worked by 735,000 full-time equivalent jobs.

Moreover:

A 10 percent retaliatory tariff would reduce GDP by 0.3 percent in the long run and hours worked by 252,000 full-time equivalent jobs. A 15 percent retaliatory tariff would reduce GDP by 0.4 percent and hours worked by 360,000 full-time equivalent jobs. Finally, a 20 percent retaliatory tariff would reduce GDP by 0.5 percent and hours worked by 460,000 full-time equivalent jobs.

The lesson: that which is not seen will not fail to make itself painfully felt.

Read the full piece here.

American Enterprise Institute: “Trepidation Day: Reciprocal Tariffs and the Vulnerability of US Agriculture”

Tracking tariffs’ effects on a single sector illustrates the shock waves of dysfunction they generate throughout economic and political life. Rising consumer prices, falling exports, harm to American businesses, and new demands for government intervention all flow from protectionist folly.

Consider agriculture, as Joseph W. Glauber does for the American Enterprise Institute. First off, agricultural imports — such as animal products, grains and feeds, farm machinery, and (most importantly to the TPA policy team) coffee — will become subjected to tariffs. This could make Trump’s the second consecutive administration during which Americans worry about grocery prices.

Farmers must worry about trade wars more than most. Tariffs shrink exports, as do retaliatory tariffs. Moreover, Glauber notes, “for most agricultural commodities, the growth opportunities remain outside the US.” To flourish, farmers must export. Indeed, the U.S.–China trade war waged during the first Trump administration inflicted great harm on American agriculture.

Instead of removing the cause of these harms — the tariffs — Congress and the administration succumbed to demands for relief and provided farmers with aid. Last go around, Glauber reports, “the US used authorities under the Commodity Credit Corporation (CCC) Charter Act to provide more than $23 billion to farmers affected by lower prices due to the trade war.” Should the current multi-front trade war proceed, agriculture lobbyists will flood Washington once again to ask the government to dispense money to mitigate the economic damage the government has inflicted. Thus, interventionism begets interventionism, and protectionism begets cronyism.

Read the full piece here.

International Center for Law & Economics: “Imaginary Consensus as a Legitimizing Philosophy of the New Antitrust Meta-Narrative”

Lazar Radic of the International Center for Law & Economics writes that the ongoing revolution in the land of competition policy began in error.

“The prevalent (or, at least, the loudest) grand antitrust narrative of today posits that so-called ‘digital markets’ present unique anticompetitive and evidentiary challenges that can only be adequately addressed through ex-ante rules or strong presumptions that mitigate (if not entirely overturn) the previous ‘dogmatic’ adherence to economic analysis,” Radic writes. “This story — a subplot in a broader fairy tale about the alleged unmitigated failure of antitrust in the ‘neoliberal era’ — functions as the lynchpin of a new antitrust ideology that seeks to redefine the role of competition and competition law in society.”

As the report describes, no international consensus — imagined by the competition-policy revolutionaries — has congealed with respect to how digital markets ought to be regulated. The theories behind Europe’s Digital Markets Act — a revolutionary law that abandons consumer welfare to give favors to uncompetitive rivals of big firms — have found little purchase in many countries. Moreover, digital markets remain competitive. Attempts to implement the new ideology — such as the Federal Trade Commission’s pursuit of Meta’s acquisition of an artificial intelligence startup — have faltered in court.

Radic outlines recent global trends masterfully, and in detail. For that alone, the report merits reading. But some of its best contents provide a larger view:

Grand narratives will always be compelling because they tap into popular themes and prejudices to offer simple stories about (and solutions to) complex phenomena. As narratives go, the new antitrust meta-narrative is particularly difficult to dispel, because it rides a generational populist anti-capitalist wave built on a shaky but attractive ideational foundation: “techno-feudalism,” “surveillance capitalism,” “neoliberalism,” etc. These are the bogeymen of our time, and “Big Tech” embodies them all.

Here, narrative appeal trumps facts and analysis. It doesn’t matter that those brandishing the term cannot even properly define what “neoliberalism” is. It doesn’t matter that, despite the supposed hegemony of neoliberalism, government spending as a percentage of GDP has exploded. It doesn’t matter that markets are shot-through with laws and regulation. It doesn’t matter that “killer acquisitions” constitute a minuscule portion of tech acquisitions.

 Meta-narratives are big stories that rely on big, sweeping claims. What they offer is a story of heroes and villains; good vs. evil; the righteous vs the wicked. And in such a story, there is no place for nuance and no need for evidence.

Competition policy can be a dreary place. Merely patrolling the edge of markets for the occasional anticompetitive conduct cannot satisfy regulators who wish to rearrange entire markets to reflect their own conceptions of “fairness.” This impulse leads enforcers to preference competitors over true competition, innovation, and consumer welfare. It is no way to run a railroad — or to regulate digital markets.

Read the full piece here.

Note: TPA highlights research projects that contribute meaningfully to important public-policy discussions. TPA does not necessarily endorse the policy recommendations the featured authors make.