Economist Craig Shapiro has expressed skepticism regarding President Donald Trump’s trade policies, expressing concerns about tariff revenue not being able to fund the trade deficit, which is likely to widen after his proposed tax cuts. This is particularly following the exemption of smartphones, chips, and computers from reciprocal tariffs on Friday.
What Happened: In a post on X, Shapiro stated, “Well. I was wrong about Trump again. He did cave. Exempting smartphones and computers from the reciprocal tariffs.”
Shapiro anticipated a shortfall in tariff revenue, which was seemingly intended to offset government deficits. “And now it seems like there won’t really be tariff revenues to help fund the deficits either,” he wrote.
This lack of tariff revenue, combined with potential future tax cuts, raises concerns about increasing the national debt. “Eventually we will get the tax cuts but unfortunately they will come with more deficit expansion and higher inflation and higher yields,” he added.