Harvard University professor Gita Gopinath has criticized the Trump administration’s tariffs, saying the overall outcome is negative for the US economy. She shared her views in a social media post highlighting the real impact of tariffs on inflation, businesses, and trade performance.
Tariffs Raised Revenue but Hurt Businesses
Gopinath noted that while tariffs have generated substantial government revenue – about $190 billion in 2025, marking a 160% increase from the previous year – this gain comes at a cost. The burden, she said, is “borne almost entirely by US firms” and later passed on to consumers, effectively functioning as a tax on American businesses and households.
Inflation Rises, Especially in Consumer Goods
The economist pointed out that tariffs have raised inflation by small amounts overall, but with bigger price increases in everyday products like household appliances, furniture, and coffee. US annual inflation accelerated to 2.9% in August 2025, showing that tariff-related cost pressures are filtering through to consumers.
No Improvement in Trade Balance or Manufacturing
Despite higher tariff collections, Gopinath said there are no signs of improvement in either the US trade balance or the manufacturing sector. In fact, the US trade deficit widened by 32.5% to $78.3 billion in July as imports surged 6% to $358.8 billion. This, she noted, suggests tariffs have not achieved their intended goals.
Key takeaway: The tariffs are acting like a tax on US firms and consumers, slightly raising inflation and failing to boost trade or industry output.
India Faces Heavy 50% Tariffs
India has been hit particularly hard, facing a 50% tariff on most of its exports to the US. About half of this penalty, according to reports, is tied to India’s continued purchases of Russian oil. The ongoing trade negotiations between the US and India have so far failed to produce any agreement, while the Trump administration has successfully signed bilateral trade deals with Japan, South Korea, Vietnam, the European Union, and the United Kingdom.
Summary
- Tariffs raised US government revenue to $190 billion in 2025.
- Costs fell mainly on US firms and consumers.
- Inflation rose to 2.9% in August 2025, hitting daily goods like furniture and coffee.
- Trade deficit widened by 32.5% to $78.3 billion.
- India faces 50% tariff on exports, with no trade deal yet.
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