Victor Davis Hanson Discusses Tariff Predictions and Economic Policy

Victor Davis Hanson appeared on Fox Business, where he critiqued those who forecasted economic turmoil due to the Trump administration’s trade policies, especially the elevation of tariffs.

Media outlets have frequently anticipated a surge in prices as a direct result of President Trump’s tariffs. Yet, these forecasts have largely missed the mark—inflation has steadied, even with a 10% tariff imposed after a 90-day delay. During his segment on “Kudrow,” Hanson remarked that the economists opposing tariffs seem to overlook significant aspects of the global economy.

“I think we’re entering a new era, Larry. This is uncharted territory. The benefits of foreign policy and trade partnerships are perhaps more complex than we realize,” he stated. He added that a medium tariff of around 10-15% could be absorbed without driving up prices for consumers.

Hanson further pointed out other substantial changes in policy that have left economists scratching their heads.

“There’s an unprecedented rally happening. I can’t quite gauge the economic influence of the new foreign investments, estimated between $10 trillion and $15 trillion,” he noted. “For context, the overall market capitalization in Silicon Valley is about $9 trillion. We’re discussing figures that are beyond our usual experiences.” He also mentioned significant tax revenues from remittances and donations globally.

According to Hanson, the shifts in U.S. policies are venturing into uncharted realms that even leading experts didn’t anticipate. “There are numerous new developments, and I’m not sure experts fully grasp the complexities. For instance, if regulatory bodies like the EPA are cutting down a lengthy application process, a lot of individuals are saying there’s growing public support for these changes,” he explained.

Back in March, experts cautioned that fresh tariffs could ignite a global trade conflict, hike consumer prices, and potentially trigger economic downturns. Yet, despite these predictions, inflation remained lower than expected. In May, the consumer price index showed only a slight rise, raising questions about the anticipated burdens from tariffs.

In June, news outlets highlighted that the inflation surge driven by tariffs, which many economists had dreaded, wasn’t manifesting as expected. The Treasury Secretary noted a minimal rise in both consumer and producer price indexes for May. Additionally, June saw an addition of 147,000 non-farm jobs, surpassing earlier projections.