Economist Dr Vladimir Tyazhelnikov from the School of Economics at Sydney University, speaking on a recent episode of the Relative Return Insider podcast, criticised the administration’s approach, highlighting the risks of rent-seeking and market volatility inherent in such policies.
Tyazhelnikov, who shares the scepticism of many economists, explained that tariffs often create significant uncertainty for businesses and investors alike, as they affect companies in both positive and negative ways.
He pointed out that: “When we start first introducing tariffs, it affects some companies in positive ways, some companies in negative ways. But it’s hundreds of millions, sometimes billions of dollars at stake.”
According to Tyazhelnikov, although tariffs are framed as tools to protect domestic industries, the US administration’s unpredictable use of them has caused volatile market swings, with some companies appearing to benefit disproportionately – raising concerns about potential insider advantages.
“Which companies will be exempt from tariffs [and] which are not, depends on one person who makes these executive decisions,” the economist said, alluding to the controversial $1 million-per-head dinner at Mar-a-Lago that many speculate may have played a significant role in shaping US policy on AI chip exports to China.
The dinner, attended by Nvidia CEO Jensen Huang, reportedly led to the White House halting additional restrictions on the sale of Nvidia’s H20 AI chips to China, raising concerns about the intersection of corporate lobbying and government policy.
“We do not know exactly what happens under the table,” Tyazhelnikov said. “It is not a very transparent procedure.”
“The rapid introduction of tariffs and then this 90-day pause which led to quite a lot of volatility in the stock market. Who benefited from it can be classified as insider trading,” he added.
“I guess it’s a question to the American lawyers, but it definitely does not seem like it is transparent when policy leads to such huge changes on the stock market.”
Another key concern with the Trump administration’s tariff strategy is its blanket approach, in that it does not target specific industries or sectors that could benefit from protection.
Tyazhelnikov described this lack of precision as problematic, noting: “Tariffs do not seem like the best tool to bring production home.
“There are subsidies, and it’s typically better when they’re introduced in a more transparent legislative way.”
Suggesting that tariffs, when used, should either be temporary bargaining tools or implemented permanently to protect domestic industries, Tyazhelnikov pointed to past successes, such as the protection of Harley-Davidson in the 1980s, when tariffs helped shield the American motorcycle industry from competition with Japanese producers.
“The tariffs were introduced for five years. It was a temporary protection measure and Harley-Davidson managed to restructure their production process and five years later, it survived,” he said.
This time around, however, Tyazhelnikov believes the tariffs are not acting as a well-thought-out tool for industrial policy, raising the question of why they are being implemented in the first place.
“If it were a targeted tool of responsible industrial policy, we would have discussed whether it is the best tool and how helpful it is going to be. But the way it is implemented, it doesn’t seem like it is the main purpose of this policy,” he said.
“Why would the US impose tariffs on garments, on food, agricultural products, chemical products, some things that maybe the US does not want to rebuild or to expand in their country.”
Economists and market pundits aren’t the only ones questioning Trump’s tariffs. On Friday, Senator Elizabeth Warren, the top Democrat on the Senate banking committee, accused Treasury Secretary Scott Bessent of sharing “inside information” about Trump’s tariff plans with Wall Street insiders, bypassing the public.
At a closed-door JPMorgan Chase event on Tuesday, Bessent allegedly suggested that the US–China tariff stand-off would soon de-escalate. When news of his comments leaked, stocks surged, with Trump later confirming Bessent’s remarks to reporters.
Warren also claimed that Trump’s “opaque decision making on tariffs and frequent, seemingly random changes” appear designed to benefit well-connected investors who receive information before the public.
While these allegations have prompted calls for investigations, legal experts suggest that proving insider trading in this context may be difficult.
US think tank PolitiFact suggested just last week that holding President Trump accountable for insider trading is unlikely due to his presidential immunity, making private lawsuits his only potential risk, although proving illegal conduct would be challenging.
To hear more from Tyazhelnikov, click here.
