Donald Trump Doesn’t Understand How Tariffs Work, Expert Wonders If Wharton Should Revoke Economics Degree

U.S. President Donald Trump
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President Donald Trump’s alma mater — the Wharton School — could consider revoking the degree of perhaps their most high-profile alumnus in response to the president’s publicly poor grasp of basic economic concepts, as David Rothkopf muses in a column for The Daily Beast. Rothkopf is CEO of the Rothkopf Group and has served as Deputy U.S. Under Secretary of Commerce for International Trade Policy during the Clinton administration, as well as Acting Under Secretary for International Trade.

Rothkopf’s contention regarding Trump’s economic illiteracy includes recent statements made by Trump with respect to ongoing trade disputes between China and the United States.

“Talks with China continue in a very congenial manner – there is absolutely no need to rush – as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S.,” Trump wrote on Twitter, in a series of tweets in the early hours of Friday morning.

Rothkopf described Trump’s interpretation of the trade war between the U.S. and China as “so profoundly dumb that it would surely have earned anyone who submitted it as a paper an F in an intro-to-economics course.”

The problem with Trump’s explanation, as Rothkopf points out in his column, is that it fundamentally misunderstands the mechanics of how tariffs actually work.

Tariffs are not, in fact, being paid to the United States by China. Since the tariffs are paid on Chinese goods purchased by American consumers and businesses, that money comes from Americans, not from China. So rather than the tariffs acting as a fee imposed on China, they, in fact, function more like a tax paid by Americans.

“WTF, Wharton?” Rothkopf wrote.

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“While Trump’s serial tax fraud and business failures did not shame you into revoking his degree, surely such public displays of economic illiteracy should,” the writer contends. “And yes, we long ago learned he did not graduate first in his class as was long advertised.”

While Rothkopf does not go so far as to predict that Wharton would revoke Trump’s degree based on his tweets about tariffs (or anything else for that matter), he does suggest that Joseph Wharton, the school’s namesake, would have been “repelled and appalled” at Trump’s antics, particularly with respect to matters of economics.

In addition to his work with Rothkopf Group, Rothkopf provides content and advisory guidance to companies and governments, including the United Arab Emirates.