Brent Neiman, a former Treasury Department official in the Biden administration and a professor at the University of Chicago, has publicly chastised the Trump administration for misusing his research on tariffs.
The economist vented his frustrations in a New York Times guest essay published Monday, where he challenged the administration for citing his academic work in the calculations behind their tariff policies — contending that they “got it wrong.”
Neiman’s study, co-authored with three other economists, examined the economic impact of tariffs, specifically regarding U.S. trade deficits and the effect of putting duties on imports.
Neiman’s work implied that tariffs would need to be much lower than those the Trump administration ultimately imposed. However, in the “Reciprocal Tariff Calculations” report, the U.S. Trade Representative (USTR) cited his paper to defend much steeper tariff rates.
Neiman wrote in his op-ed that the administration’s citations of his findings contained fundamental flaws. He voiced disbelief that the USTR, led by a Trump administration trade representative, Robert Lighthizer, used his research to justify “dramatically higher” tariff rates than were warranted by his work. Neiman said the tariffs were approximately four times higher than the data indicated.
Neiman said the Office of the U.S. Trade Representative had published its methodology and quoted an academic paper written by four economists, including him, as seeming to endorse its figures. But he also said the USTR had “got it wrong” and “very wrong.”
Specifically, Neiman noted that the USTR used a 25% “pass-through” rate, a key figure that describes how much of the tariff burden gets passed through from the importer to the consumer, rather than the 95% pass-through rate that his research calculated. If the government had been working from the more accurate number from Neiman’s study, the resulting tariffs would have been much lower, Neiman said.
Economists are critiquing the reciprocal tariff strategy
Neiman’s criticism went beyond the flawed application of his research to the general strategy behind the tariffs. The Trump administration’s policy was based on “reciprocal tariffs” to reduce trade deficits with some countries. The policy was part of Trump’s broader strategy to “level the playing field” in trade and to take particular aim at countries including China, Mexico, and the European Union.
Neiman argued that pursuing zero trade deficits by raising tariffs is a misguided end. He said that Trade disparities are usually the product of many economic variables, including but not limited to differences in natural resources, comparative advantage, and stages of economic development. He made the case that Americans are spending more on clothes made in Sri Lanka than Sri Lankans are spending on American goods and that this isn’t an indication of unfair competition but rather the result of different economic structures, he said.
Imbalances in trade between two nations can occur for any number of reasons unrelated to protectionism, Neiman wrote, adding that the administration was oversimplifying the problem.
Neiman also noted another major problem: The formula used to compute the new tariffs is broken. The formula was based on the assumption that tariffs on one country would not change imports from other countries and would not affect exports. Neiman said this assumption is unrealistic regarding broad, sweeping tariffs that apply to multiple countries, as they do.
Neiman explained that a big tariff on Japanese auto parts could push up demand for auto parts from Mexico instead as manufacturers search for cheaper alternatives, and vice versa. He also said the tariffs would likely invite retaliation and, over time, could push up the dollar’s value, hurting U.S. exports.
Policymakers twisting academic research to fit their agenda is proving to be a costly and controversial move
Neiman’s work, originally meant to guide policymakers on the best way to impose tariffs, has become controversial. Neiman has even expressed his frustration at watching his research be misinterpreted and used to justify policies he fundamentally opposes.
In his op-ed, Neiman disagreed fundamentally with the government’s trade and trade policy approach. Even taken at face value, he added, their findings indicated that the calculated tariffs should be much smaller — perhaps one-fourth as large.
The dust-up over Neiman’s research reflects the persistent debates in America over trade policy. The global economic landscape is evolving, and the U.S. relationship with its trade partners remains a hot topic in politics. The policy-making process involving the no-good use of academic research poses valid questions of transparency and accountability.
