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The levies are also likely to reduce America’s economic output, as has happened before. A 2020 study, based on data from 151 countries, including the US, between 1963-2014, found that tariffs have “persistent adverse effects on the size of the pie,” or the gross domestic product of the country imposing them.
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There are a number of possible explanations for this.

One is that, when tariffs are low or non-existent, the country in question can focus on the kind of economic activities where it has an edge and export those goods and services, Gimber told CNN.
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“If you raise tariffs, you’re not going to see that same level of specialization,” he said, noting that the result would be lower labor productivity. “The labor could be better used elsewhere in the economy, in areas where you have a greater competitive advantage.”
Another reason output falls when tariffs are raised lies in the higher cost of imported inputs, wrote the authors of the 2020 study, most of them International Monetary Fund economists.

Fatas at INSEAD suggested the same reason, providing an example: “So I’m a worker and work in a factory. To produce what we produce we need to import microchips from Taiwan. Those things are more expensive. Together, me and the company, we create less value per hour worked.”

Yet another way tariff hikes can hurt the economy is by disrupting the status quo and fueling uncertainty over the future levels of import taxes. That lack of clarity is particularly acute this year, given the erratic nature of Trump’s trade policy.

Surveys by the National Federation of Independent Business in the US suggest the uncertainty is already weighing on American companies’ willingness to invest. The share of small businesses planning a capital outlay within the next six months hit its lowest level in April since at least April 2020, when Covid was sweeping the globe.

“The economy will continue to stumble along until the major sources of uncertainty (including over tariffs) are resolved. It’s hard to steer a ship in the fog,” the federation said.

Whichever forces may be at work, the IMF, to cite just one example, thinks higher US tariffs will lower the country’s productivity and output.

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The levies are also likely to reduce America’s economic output, as has happened before. A 2020 study, based on data from 151 countries, including the US, between 1963-2014, found that tariffs have “persistent adverse effects on the size of the pie,” or the gross domestic product of the country imposing them.
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There are a number of possible explanations for this.

One is that, when tariffs are low or non-existent, the country in question can focus on the kind of economic activities where it has an edge and export those goods and services, Gimber told CNN.
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“If you raise tariffs, you’re not going to see that same level of specialization,” he said, noting that the result would be lower labor productivity. “The labor could be better used elsewhere in the economy, in areas where you have a greater competitive advantage.”
Another reason output falls when tariffs are raised lies in the higher cost of imported inputs, wrote the authors of the 2020 study, most of them International Monetary Fund economists.

Fatas at INSEAD suggested the same reason, providing an example: “So I’m a worker and work in a factory. To produce what we produce we need to import microchips from Taiwan. Those things are more expensive. Together, me and the company, we create less value per hour worked.”

Yet another way tariff hikes can hurt the economy is by disrupting the status quo and fueling uncertainty over the future levels of import taxes. That lack of clarity is particularly acute this year, given the erratic nature of Trump’s trade policy.

Surveys by the National Federation of Independent Business in the US suggest the uncertainty is already weighing on American companies’ willingness to invest. The share of small businesses planning a capital outlay within the next six months hit its lowest level in April since at least April 2020, when Covid was sweeping the globe.

“The economy will continue to stumble along until the major sources of uncertainty (including over tariffs) are resolved. It’s hard to steer a ship in the fog,” the federation said.

Whichever forces may be at work, the IMF, to cite just one example, thinks higher US tariffs will lower the country’s productivity and output.

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Colin Goodson knows more about energy than most people.

The tall, bearded Mainer is an engineer on an offshore oil drilling ship in the Gulf of Mexico. But when it came time for him to build a home in Southern Maine, Goodson largely bypassed fossil fuels.
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The house he built is entirely off the grid, powered from rooftop solar and batteries that convert the sun’s energy to electricity. Electrons power much of his two-story home; it is heated and cooled with heat pumps, and Goodson and his wife cook meals on an induction range. Incredibly well-insulated, the entire home is heated by a small wood stove.
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Goodson loves his new house, even though it has raised the eyebrows of his drilling ship colleagues.

“All the guys at work think I’m crazy,” Goodson said during a recent tour of his home. “They think I’m living in a shack out in the woods somewhere and I go outside to use the toilet, but that’s clearly not the case.”

The house, built by New Hampshire company Unity Homes, is a far cry from a shack. Modern and spacious, it has running water and three bathrooms.
Despite also having initial concerns about her husband’s off-the-grid aspirations, Katie Goodson is a convert as well – especially after the lights stayed on during an intense storm that knocked their neighbors’ electricity out.

“I would never go back,” she told CNN. “When I tell co-workers or neighbors that we live off-grid and they see the house, they’re always like, ‘Whoa, this isn’t what I was expecting!’ It’s really fun surprising people; I live a totally normal life.”

The Goodsons are part of a small but growing number of homeowners who are choosing to build energy-efficient “panelized” homes that are pre-made in a factory. The homes are better for the climate, and although they have a high upfront cost, several homeowners say their energy savings, quality of life and overall cost of living has greatly improved since moving in.