WaPo - (archived: https://archive.ph/xYmuI ) Lutnick’s economically incoherent and contradictory commentary

The Commerce secretary is constantly on television, but his claims don’t make much sense.

May 8, 2025 at 5:00
Analysis by Glenn Kessler

You can hardly turn on the television without catching an interview with Commerce Secretary Howard Lutnick, a billionaire and former Wall Street executive. But much of what he says is economically incoherent and contradictory. Here’s a guide to Lutnick’s talking points — and what’s wrong about them. (A Commerce Department spokesman did not respond to a detailed request for comment.)

Tariffs aren’t a big deal

“A 10 percent tariff is not going to change virtually any price. The only price it would change would be a product that we don’t make here, like a mango.”
— Lutnick, remarks during an interview on CNBC, April 29

This flies in the face of basic economics. Economists agree that tariffs — essentially a tax on domestic consumption — are paid by importers, such as U.S. companies, which in turn pass on most or all of the costs to consumers or producers who may use imported materials in their products. As a matter of demand and supply elasticities, overseas producers will pay part of the tax if there are fewer goods sold to the United States. Moreover, because imported goods are more expensive, domestic producers will raise their prices to the level imposed on importers.

Lutnick often goes on to say that companies can avoid tariffs by simply making products in the United States. Even so, domestic manufacturers will price their products higher to match the cost of imported goods. After all, why give up that potential profit?

Great jobs will come — for robots
Lutnick frequently brings up the iPhone as the type of product that can be made in the United States.

“We invent the iPhone, which is awesome. Why do we let everyone else build it? Why can't we build it here? … We need hundreds of thousands of Americans who work in those factories. And I think we are going to produce 5 million great trade craft jobs in America.”

/snip