by Chris Wilson-Smith
It was just after a game of recreational three-on-three basketball in Hamilton when Pau Pujolas checked his phone and saw a message.
“You are famous,” the note from his academic mentor read. “Not sure you’re going to be happy.”
Then came more texts, this time from the McMaster University professor’s circle of friends and economists. They all came with the same link – to the White House website, which shared remarks delivered hours earlier Monday afternoon by Stephen Miran, one of the lead architects behind U.S. President Donald Trump’s sweeping trade plan.
Speaking at a conservative think tank in Washington, Mr. Miran, chairman of the White House Council of Economic Advisers, made the case for Mr. Trump’s decision to impose a new wave of tariffs – including levies of 104 per cent on Chinese imports, which has triggered dramatic retaliation from the Asian superpower. The annotation next to one of Mr. Miran’s remarks might have gone unnoticed to most anyone but Prof. Pujolas, whose research deals in the precise mathematical modelling of trade relationships. Mr. Miran was citing a paper that Prof. Pujolas had co-authored with a fellow researcher at Georgetown University.
“It’s not that they misunderstood the paper,” Prof. Pujolas said in an interview. “They understood it very well. But they are using it for something the paper was never intended to support.”
The moment came during a week of economic and geopolitical shock. On Monday, China imposed its own 84-per-cent tariff on all U.S. imports, with state media warning that Washington had “lost its mind.” Global markets plunged. Oil fell to a four-year low. Bond yields spiked as investors fled Treasuries, fuelling speculation that China could be quietly offloading U.S. debt.
On Wednesday, Mr. Trump said he is pausing “reciprocal” levies above 10 per cent for 90 days on countries that have not retaliated against the United States while increasing tariffs on imports from China to 125 per cent.
It is into this climate that Mr. Miran, a former hedge-fund manager and long-time proponent of economic nationalism, has stepped forward to offer the intellectual rationale behind the administration’s moves.
In his remarks, he said the U.S. was “well-positioned to benefit from trade negotiations or disputes” given its trade imbalance with China. He then cited the 2024 paper by Prof. Pujolas and his co-author, Jack Rossbach: “In the presence of large trade deficits, optimal tariffs are higher.”
That statement is technically accurate, Prof. Pujolas said – but incomplete. “Yes, if tariffs are carefully designed and targeted, the U.S. can, in theory, improve its position. But the kinds of tariffs being used now are not what our model describes.”
He said the paper’s methodology relied on extensive modelling of global trade flows, using what’s known as a “genetic algorithm” to determine how specific tariffs in specific sectors might affect national welfare.
“We used a supercomputer,” Prof. Pujolas said. “The White House would have far better tools than we do. But that’s not what they’ve done.”
Prof. Pujolas said his research found that had the U.S. applied tariffs differently in 2018 – targeting the right sectors, at the right magnitudes – it could have extracted modest welfare gains. “But even then, those gains would have come at the expense of China,” he said. “The overall effect would have been negative for the world.”
The paper also concluded that both countries would be better off under free trade. “We find that the best outcome is to lower tariffs altogether,” Prof. Pujolas said. “The world as a whole gains.”
The professor said the intended audience was not national governments but global institutions. “The hope was that it would be used by the IMF or WTO he said, not to justify new trade wars, but to understand the tensions created by persistent deficits.”
“We didn’t write the paper as an encouragement for any country, in particular the U.S., to start the trade war. That was never intended.”
He said the reaction from economists has been largely supportive. But the attention has drawn renewed interest from his native Catalonia, where news about the White House citing a researcher from the mountain town of Solsona has created a separate wave of interest.
“We just do a discovery,” Prof. Pujolas said. “And I was hoping it would lead to a world with fewer trade wars. It has led to the opposite, or at least it’s being used to justify the opposite. And that is saddening.”
Source: Globe and Mail