For years, the globalist economic establishment and its media allies have relentlessly attacked tariffs as an economic catastrophe, scoffing at anyone who dared suggest they could benefit America. Yet, a bombshell analysis of the Federal Reserve’s own primary economic model reveals a truth they actively suppressed: tariffs can, in fact, significantly boost U.S. economic growth and investment in the long term, even when foreign nations absorb barely any of the cost.
The Federal Reserve Board’s large-scale model, known as FRB/US, paints a clear picture. A broad 10 percent tariff on non-oil goods can lead to real GDP being approximately 0.28 percent higher after ten years, with business investment also seeing an uptick. And this positive outcome requires foreigners to absorb just over one percent of the total tariff bill. It’s a stunning repudiation of the 'tariffs are always bad' dogma.
This striking result stands in stark contrast to the mainstream economics profession’s open animosity toward tariffs. For too long, economists—even those at the Fed—have fixated solely on the supposed "costs," pouring endless resources into arguments against tariffs. Curiously, they’ve done almost no work exploring the inconvenient fact that their own institution’s model shows tariffs as a net positive for growth. One must ask: why the selective blindness
The truth, however, could not be hidden forever. In a recent examination of "alternative histories," Harvard economist Jason Furman used the Fed’s model to simulate a permanent 10 percent tariff. His simulations claimed the American economy would shrink, with real GDP 0.22 percent lower after ten years and business investment down 3.51 percent. But there's a crucial detail that was conveniently buried.
Furman’s negative forecast wasn't derived from the Fed’s standard model operating as intended. Instead, it stemmed from a significant modification he made. He altered the model’s standard investment-price equation, which normally recognizes that higher domestic selling prices can encourage expansion. Furman essentially suppressed this critical channel, ensuring his simulation portrayed tariffs as "all costs and no benefit."
The mainstream narrative hinges on the idea that tariffs primarily hurt American consumers and businesses through higher prices and weaker investment. But this view often ignores the other side of the ledger: the potential for higher domestic selling prices to incentivize new production and investment. Furman's adjustment effectively guaranteed that the "discouraging effect" of expensive equipment was preserved, while the positive incentive for expansion was artificially removed. A convenient omission, wouldn't you say?
What happens, then, when we simply restore the Fed’s standard, unmanipulated equation? The results are nothing short of a dramatic transformation. With this single change, even if foreign suppliers absorb none of the tariff bill, ten-year GDP shifts from being below baseline to about 0.27 percent above it. The projected investment decline of 3.51 percent virtually vanishes, shrinking to a mere 0.075 percent. The entire narrative of catastrophic investment loss disappears before foreign suppliers contribute a single penny.
Now, consider a minuscule concession: foreign equipment suppliers absorb just four percent of the duties on their goods through lower pre-tariff prices. This translates to a foreign contribution of barely 1.16 percent of the total tariff bill – meaning Americans still bear nearly 99 percent of the initial cost. Yet, with this minimal adjustment, ten-year GDP soars 0.282 percent above baseline, and investment moves into positive territory, roughly 0.016 percent higher. The alleged 'investment decline' of over three percent is completely reversed. The gains persist, with GDP 0.21 percent higher and investment 0.42 percent higher after 30 years.
These simulations likely underestimate the true contributions of tariffs to growth. They don’t even factor in the critical additional investment from foreign or American companies building new factories on U.S. soil, nor do they account for a wave of reshoring or expanded export opportunities secured through strategic trade negotiations. The benefits uncovered emerge solely from the Fed’s existing economic relationships – once they are allowed to operate without external interference.
The lesson is clear: when the Federal Reserve’s own model is allowed to function transparently, without politically convenient alterations, it confirms what President Trump and America First advocates have argued all along. Tariffs, strategically applied, are a powerful tool for raising American output, boosting investment, and securing our economic future. It’s no longer a matter of debate, but a matter of acknowledging what the data plainly shows. The question isn't whether tariffs work for America, but why the powerful gatekeepers of economic discourse fought so hard to keep this truth from the American people. And somehow, they still expect Americans not to notice.
