This is the Cato Daily podcast for Monday, February 10th, 2025. I'm Caleb Brown.

Tariffs are typically bad policy for a number of reasons. But what about the uncertainty that goes

along with the mere threat of those tariffs? It certainly impacts decision-making by firms.

And when you're tallying up the costs and benefits of the Trump

trade policy, the threats make a difference. Brian Albrecht is chief economist at the International

Center for Law and Economics. We spoke last week. I feel bad for a lot of my journalist friends right now because the news cycle is constantly turning over in massive ways, switching from one area of policy to another area of policy in the new Trump administration.

And changing the subject is something that this president is quite good at.

When it comes to tariffs, this seems to be a fairly deeply held view that tariffs are good.

They are productive.

And whatever the costs might be, the benefits far outweigh the cost.

Now, that is a separate fight than what I hope you and I can discuss today.

The mere threat of tariffs seems to introduce a lot of uncertainty on the trading partners, the

international trading partners of American people and individuals. What do we know about that?

Yeah, so it's a great point and it's a, it's a great question, because, you know, we're in really a new territory for exactly what this means, but we have some guidance on the nature of uncertainty, how policy affects uncertainty, and then how that influences, let's say, business investment.

So one of the most heavily researched areas within macroeconomics

over the last, let's say, 15 years is the effect of uncertainty on investment, employment,

output, things like that, all the kind of big macro variables you can think of. This goes back to

work by Nick Bloom, Baker, African Baker's name, I feel bad, and

Stephen Davis.

And they have a paper that shows that the rise in uncertainty across U.S. policy, this is

a policy and market uncertainty that they have measures of.

The rise of that around the financial crisis led to something

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