Though the phenomenon was known as far back as the 1600s, economist Abba Lerner proved in 1936 that an import tariff is tantamount to a tax on exports. That link was especially strong while the U.S. was still under the gold standard, but is still holds sway. "If the U.S., for any reason, cuts its imports from a trading partner, that country’s economy and currency both weaken, so it buys less from U.S. companies," Ip reports. "If a tariff generated significant new demand for the protected American sector, the resulting boost to prices and jobs would put upward pressure on inflation, interest rates and the dollar, further hurting exports.
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