What Trump’s Tariffs Will Actually Do | The Ezra Klein Show

This episode explores the economic ramifications of Donald Trump's unexpected tariff announcements, dubbed "Liberation Day," focusing on the unconventional methodology and potential consequences. Against the backdrop of widespread unease about economic freedom, the host interviews Nobel laureate Paul Krugman to dissect the policy. More significantly, the discussion reveals the tariffs' calculation was based on a seemingly arbitrary formula derived from bilateral trade deficits, a method criticized by Krugman as lacking economic grounding and potentially originating from AI prompts. For instance, the resulting country-specific tariffs created logistical nightmares due to ambiguous rules of origin. As the discussion pivoted to market reactions, Krugman highlighted the market's apparent rejection of the policy's purported benefits, contrasting the performance of US and Chinese manufacturing stocks. In contrast to the administration's justifications, Krugman argues the unpredictability inherent in the policy, rather than tariffs themselves, poses the greatest threat to economic stability, increasing the likelihood of a recession. Ultimately, the episode underscores the chaotic nature of the policymaking process and its potential for far-reaching global economic instability.