2025 CNBC Interview: Cato Institute’s Lincicome Criticizes Tariffs’ Impact on U.S. Prices and Manufacturing

On December 26, 2025, Scott Lincicome—Vice President of General Economics at the Cato Institute, a longstanding free-trade advocate—appeared on CNBC’s The Exchange to critique U.S. tariff policies [1]. Lincicome’s core argument that tariffs are inflationary and harmful to American manufacturing aligns with the Cato Institute’s historical stance against protectionism.

Supporting data from the Los Angeles Times and AP News confirms the 2025 surge in U.S. tariffs: the effective tariff rate reached nearly 17% in November 2025—seven times higher than January 2025 levels and the highest since 1935, per Yale Budget Lab data [2][3]. Tariffs on Chinese imports now stand at 47.5%, according to calculations by Chad Bown of the Peterson Institute for International Economics [2][3].

The analysis shows that while tariffs generated record federal revenue in 2025, they failed to narrow the U.S. trade deficit or deliver the “manufacturing renaissance” promised by protectionist proponents [2][3]. Instead, tariffs have raised consumer prices by increasing costs for imported goods and domestic manufacturing inputs [2][3]. They have also disrupted global supply chains, forcing businesses to restructure sourcing at additional cost and creating compliance complexities (e.g., tariff classification, exemption applications) [1].

Tariff uncertainty has further split global commodity markets—such as copper—into “U.S. vs. non-U.S.” segments, contributing to price volatility and supply squeeze concerns for 2026 [4].

1. Policy-Ideology Alignment
   : Lincicome’s critique reflects the Cato Institute’s longstanding advocacy for free trade, framing tariffs as hidden taxes on consumers rather than tools for economic growth.
2. Historical Precedent
   : The 2025 effective tariff rate of nearly 17% matches levels not seen since the Great Depression, highlighting the unprecedented nature of current protectionist policies.
3. Revenue vs. Economic Benefit
   : The record tariff revenue in 2025 masks limited economic gains—tariffs failed to boost manufacturing output significantly, while increasing consumer costs and supply chain disruptions.
4. Supply Chain Segmentation
   : Tariff uncertainty has split global commodity markets, with U.S.-bound supplies (like copper) trading at a premium, adding to manufacturing costs.

• Persistent inflation from tariff-induced higher consumer prices could strain household budgets and economic growth.
• Supply chain volatility in manufacturing and commodity sectors may increase business costs and reduce competitiveness.
• Compliance burdens for businesses navigating erratic tariff rollouts and exemptions could divert resources from productivity or expansion.

• Growing public and expert critiques (like Lincicome’s) could influence 2026 election policy debates, particularly if inflation persists.
• Businesses may adapt by optimizing domestic sourcing or lobbying for targeted tariff exemptions to mitigate costs.

However, the impact of these critiques may be limited by ongoing political support for protectionist policies aimed at reducing U.S. dependence on China.

• Event
  : December 26, 2025, CNBC The Exchange interview with Scott Lincicome (Cato Institute) on tariffs.
• Core Argument
  : Tariffs are driving U.S. price increases and hindering manufacturing, while creating business compliance challenges.
• Key Data
  : U.S. effective tariff rate (17%, highest since 1935); tariffs on Chinese imports (47.5%); record 2025 tariff revenue but limited manufacturing benefits.
• Context
  : Cato Institute’s free-trade stance; 2025 tariff expansion under President Trump; segmented global commodity markets due to tariff uncertainty.