White House uses Hamilton economist’s paper to justify tariffs — but misses his point ‘trade wars are bad’

Twice this month, the White House has used a Hamilton associate professor’s research to help justify U.S. President Donald Trump’s jaw-dropping tariffs and ongoing trade war with China.

Both times, the Trump administration got it wrong, said Pau S. Pujolas, an associate economics professor at McMaster University. 

“On the one hand, it’s like, ‘Wow, I’m having input,'” Pujolas told CBC Hamilton on Friday. “On the other hand, it’s not what this paper deserves.” 

The first time the White House cited the 2024 paper, “Trade deficits with trade wars,” was in its explanation of how it calculated the slew of “reciprocal tariffs” aimed at dozens of countries. Pujolas’s article is among the references. 

Those tariff numbers were also listed in the massive chart Trump held up during his April 2 “Liberation Day” announcement when he detailed a 10 per cent blanket tariff rate on nearly every country, with many getting hit harder. 

It was the second time, on Monday, that really caught Pujolas’s attention and that of his colleagues.

The economist was in a school gym having just won a basketball game — and a spot in the finals of a “very amateur league,” he said — when he saw a text from a mentor and friend warning him, “You’re famous. I’m not sure you’re going to like it.” 

Trade war: How far will China go to beat the U.S.?

Trump’s top economic adviser, Stephen Miran, who helped craft the tariffs, made the case for them at a conservative research institute in Washington, D.C. The White House published a transcript of his remarks online, including a footnote to Pujolas’s paper, which is the only academic research cited. 

“More recent economic analyses … show that by imposing tariffs against exporting countries, the U.S. can improve economic outcomes, raise revenues and impose huge losses for the tariffed nation, even with full retaliation,” Miran said. 

But the conclusions Pujolas and co-author Jack Rossbach, an assistant professor at Georgetown University in Washington, D.C., made in their paper were not that straightforward, Pujolas said.

And they certainly don’t support Trump’s 145 per cent tariffs on all Chinese goods, he said.

(Beijing hit back with 125 per cent tariffs on U.S. imports on Friday.)

Pujolas and Rossbach used mathematical modelling to determine how trade imbalances impact a country’s welfare, focusing on the U.S. trade deficit with China and the impact of tariffs during Trump’s first term in 2018 to the end of former president Joe Biden’s term in 2024. 

“The intent of the papers was to understand the motivation — why this can happen and what are the consequences?” he said.

What they found was if the U.S. had put specific tariffs on specific products from China (which didn’t happen), “there was room for modest growth or gains at the large expense of China,”  Pujolas said. 

That’s the message the White House has seized on — the possible benefits it could gain, he said. 

But the paper comes to another conclusion, too. The best outcome globally would be no tariffs, Pujolas said.

“We want to avoid trade wars,” said Pujolas. “Trade wars are bad always and everywhere.” 

Pujolas had expected the paper to convey a kind of warning to policymakers at the World Trade Organization (WTO), for example, that trade deficits need to be avoided when countries enter multilateral agreements.

Deficits can lead to countries adopting tariffs they think will be beneficial, but actually cause more harm to the global economy than good domestically, he said.

He and Rossbach co-authored another paper, published in February, about how Canada should react to U.S. tariffs.

They found Canada should focus less on retaliatory tariffs and more on removing interprovincial trade barriers.

“I’m very happy that message caught steam,” he said. 

As for the White House citing his other paper, Pujolas said there’s not much he can do about it, but if they were to reach out, “I would immediately tell them to stop.”