Portrait of Alan Greenspan
Politician · policy
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Alan Greenspan on Tariffs

Staunch tariff opponent (strong)

TL;DR

Alan Greenspan fundamentally views tariffs as an excise tax that withdraws purchasing power, ultimately harming both imposing and targeted economies.

Key Points

  • He stated that tariffs are essentially an excise tax which withdraws purchasing power from the implementing economy.

  • Greenspan described reciprocal tariff policies between major industrial nations as insane because both sides ultimately lose out.

  • In 1985, he discussed matters of international trade and foreign imports on a public affairs program.

Summary

Alan Greenspan has consistently argued that tariffs are inherently destructive to economic activity because they function as an excise tax. He explained that such taxes withdraw essential purchasing power from the economy, making any imposition of them a negative event. When two large industrial economies engage in a reciprocal tariff war, both sides suffer losses in purchasing power, meaning the overall outcome is a mutual disadvantage where the "winner" is merely the one who loses the least amount of ground.

He addressed the common misconception that tariffs correct trade imbalances, stating that the notion that foreigners are actively ripping off the imposing nation is incorrect nonsense. While he acknowledged that specific issues like intellectual property theft by foreign partners warranted attention, he did not see broad trade deficits as justification for broad import duties. The former Federal Reserve Chairman characterized the implementation of widespread tariffs as an attack on the country that imposes them, irrespective of the targeted nation’s practices.

Frequently Asked Questions

Alan Greenspan holds a strongly negative view of tariffs, viewing them as an excise tax that actively harms the economy imposing them. He argues that when implemented broadly, tariffs withdraw purchasing power, making them counterproductive for both the imposing nation and the target.

The available information suggests a consistent opposition to tariffs based on their economic mechanism, viewing them as inherently damaging taxes. While his comments specifically addressed the policies of the Trump administration around 2018, the fundamental reasoning—tariffs as a tax—appears to be a long-standing position.

Alan Greenspan dismissed the notion that foreigners are ripping off the United States through trade as nonsensical, despite acknowledging that intellectual property theft remains a valid concern. He framed broad trade deficits as an insufficient justification for imposing damaging tariffs.