- Professor Joao Gomes of Wharton Business School argues that Trump’s tariffs are likely to remain in place, as their revenue-generating potential makes them appealing to both Democrats and Republicans. Despite the possibility of new trade deals, he expects tariffs—both broad and targeted—to persist, with consumers ultimately shouldering the increased costs.
However much politicians on either end of the political spectrum may protest against Trump’s tariff policies, one economics professor says neither Democrats nor Republicans will choose to undo them in the future.
President Trump’s foreign policy since returning to the Oval Office in January has been somewhat unconventional.
Initially, tariffs were announced on the neighboring countries of Mexico and Canada, as well as economic rival China—all to curb immigration and the flow of fentanyl into the United States.
Even on the campaign trail, Trump teased further tariffs aimed at rebalancing trade with partners like the EU, Japan, Taiwan, and India. These came on Liberation Day, when Wall Street was shocked by a universal 10% tariff on every country on the planet and additional increases on nations with larger trade surpluses with the U.S.
While analysts generally expect effective tariff rates to continue to come down—signaled by pauses and deals with the U.K. (and, in the early stages, China)—one economist warns these heightened rates are here to stay.
“I think the end game is some tariffs are here to stay,” said Professor Joao Gomes of the University of Pennsylvania’s Wharton Business School. “I think they are addictive, they’re also addictive for every country in the world.”
“The truth is governments need revenues and once you see the amount of revenue the tariffs bring, I think Democrats will be addicted to them as Republicans—or are as likely to be,” Gomes added to Wharton Business Daily.
“So the tariffs are here to stay in some form: 5%, 10% across the board? Targeted? I don’t know. But tariffs are definitely not a thing of the past, not a thing of the moment.”
Analysts have begun to question the likelihood of such an event: Specialized tariffs on certain industries or products.
According to UBS this could start as earlier as the summer, with chief investment officer Mark Haefele writing last week: “The Trump administration is … preparing the groundwork for a more surgical increase in tariffs beginning this summer following trade investigations into strategic industries like pharmaceuticals, critical minerals, lumber, copper, and semiconductors.”
Deal or no deal?
While the panic over securing a ‘first mover’ for a deal with the Trump administration was delivered in the form of Sir Keir Starmer’s British government, Professor Gomes said the ongoing back and forth over how many deals will be made is anyone’s guess.
What he is confident in is that tariffs, to some extent, will still be in place come the next election: “I’m fairly comfortable that we’re gonna be here two, three years out and we’ll have a different regime where there’s gonna be more, higher tariffs around the world.
“There’ll be some nice trade deals, possible with some of the countries that are really desperate to do business with us—I think India is a really important case in point there—so I am generally optimistic that the worst is over.”
While the worst might be over, Professor Gomes previously told Fortune that he expects the consumer to ultimately foot the bill for any tariff-related price increases.
Speaking to Fortune in April following the Liberation Day announcements, Professor Gomes said any resistance by the Trump administration to admit customers would be paying higher prices would prove false: “How much ultimately gets to the consumers is questionable, but it’s definitely going to be significant, at least for a year or two. How persistent that’s [going to] last, how much inflation you’re gonna get, for how many months, that’s maybe a question to be worked out.”
Professor Gomes’s thinking has indeed played out in reality, with the Wharton senior vice dean of research adding in his latest interview: “I think it was a useful lesson in how not to provoke the gods, the market gods.”
