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Are tariffs becoming a political weapon instead of an economic tool? Justin Wolfers joins Paul Krugman and Ali Velshi to explain why using tariffs to coerce allies over Greenland is a lose-lose strategy. Wolfers argues the immediate issue isn’t just higher prices—it’s that reneging on agreements teaches partners the U.S. won’t honor its word. When countries believe there’s “no such thing as a deal,” they stop bargaining and start hedging: building alternatives, finding other partners, and preparing retaliation. He also warns that the most consequential threat may be domestic: attacks on independent institutions like the Federal Reserve. Threatening the Fed chair is the kind of tactic associated with countries that struggle with chronic inflation and investor distrust. The fact markets didn’t freak out is telling—Fed independence held this round. But repeated pressure raises the odds of lasting damage. And on proposals like a temporary 10% credit-card interest cap, Wolfers urges viewers to separate “announcements” from “action.” The real economic story is what changes the rules of the game—not what dominates a news cycle. If the U.S. loses credibility and weakens its institutions, the costs can show up in higher inflation risk, higher interest rates, and slower growth—hits that land in your wallet. Topics covered: Why tariffs can’t reliably bully large economies How U.S. credibility shapes trade outcomes Why breaking deals destroys leverage Emergency tariff authority and looming legal constraints The role of the Fed in stabilizing inflation and jobs The risks of politicizing technocratic agencies Why markets shrugged—and what could trigger a selloff Credit-card rate caps: feasible policy or distraction? Contents: 00:00 The Greenland tariff threat 01:50 Why the strategy backfires 03:25 The “blank gun” analogy 04:55 Legal constraints and the Supreme Court 06:30 The Fed chair pressure campaign 08:40 Institutions beyond the Fed (data, forecasting, agencies) 10:20 The credit-card cap and media distraction 11:30 What actually matters 👉 Key takeaway: Credibility and institutions are economic assets—once lost, they’re hard to rebuild. Subscribe for more analysis that’s pro-facts, and anti-nonsense. 📊