In his inauguration speech, President Trump vowed to “overhaul” America’s trading system “to protect American workers and families,” specifically through tariffs. He hasn’t hesitated to take action, imposing 10% tariffs against China and announcing 25% tariffs on steel and aluminum.
These aggressive measures are reattempting the harmful and unsuccessful protectionist policies of Trump’s first presidential term. They will only obstruct his promise to build “the golden age of America” by raising prices, reducing employment and fomenting corruption.
Since the Biden administration retained many of Trump’s tariffs or even expanded them, there is nothing to “overhaul” except the post-2017 bipartisan tariff regime, which an objective analysis showcases was inefficient and ultimately destructive, particularly for the working-class Americans it ostensibly aimed to uplift.
The March 2019 Economic Report of the President, signed by Trump, revealed that the tariffs against China did not achieve their intended result. “Rather than changing its practices, China announced retaliatory tariffs on U.S. goods,” the report said.
According to a Federal Reserve Board of Governors study, U.S. manufacturing industries most exposed to the effects of the tariffs experienced reductions in employment due to rising input costs and retaliatory tariffs. Import protection may have produced marginal increases in manufacturing employment, but these positive effects were offset by higher prices and retaliation, culminating in a net loss of jobs.
Because of Trump’s 2018 steel and aluminum tariffs, industries that depend on those materials as inputs to production were adversely affected by higher domestic steel and aluminum prices. By mid-2019, there were approximately 75,000 fewer manufacturing jobs attributable to the steel and aluminum tariffs.
The ensuing U.S.-China trade war led to a 1.4% decline in manufacturing employment. Oxford Economics estimates that 245,000 jobs were lost throughout the U.S. economy, and real incomes decreased by $675 per household.
In a 2022 speech, Trump’s former U.S. Trade Representative Robert Lighthizer said, “Our primary objective should be policies that will build strong American families and communities and create productive high-paying jobs. That should be our goal, not cheap stuff.”
But when “stuff” becomes more expensive through protectionism, we risk losing high-paying jobs and jeopardize the economic well-being of American families and communities. Since the primary culprit driving down U.S. manufacturing employment in recent decades was technological change, not outsourcing, higher prices via tariffs may encourage more firms to diminish their human workforce through automation.
This is not to imply that protectionism is never justified on national security grounds or that the threat of tariffs can’t occasionally serve as an effective negotiation tactic. Trump demonstrated the latter point when he forced hasty concessions from Colombia, Mexico and Canada on U.S. border security after threatening steep tariffs against each country.
However, damaging the Colombian or Mexican economy, as the tariffs would or could accomplish in the near future if levied, will only incentivize more illegal immigration into the U.S., defeating the entire purpose of the tariffs.
The godfather of free trade, Adam Smith, wrote in The Wealth of Nations, “Defence…is of much more importance than opulence.” While prioritizing our national security, we must remain prudent and not provoke unnecessary trade wars with either our adversaries or our allies, which weaken our security and increase the likelihood of military conflict.
In addition, we must caution against devious firms pressing for tariffs that will benefit their own industry, citing national security concerns. Oftentimes, they produce items that any reasonable American would attest are not vital to national security, such as sugar.
As Tufts University international politics professor Daniel Drezner said in Foreign Affairs, “If everything is defined as national security, nothing is a national security priority.”
Protectionism inherently grants the federal government the power to handpick winners and losers — to privilege certain sectors of the economy over others. This enables cronyism, corruption and inefficiency at the highest levels, and certainly doesn't serve the common good of Americans, who must bear the brunt of higher prices.
Since the Trump administration is committed to “draining the swamp,” especially through its newly-created Department of Government Efficiency (DOGE), its objective should be dismantling the bureaucratic and inefficient U.S. tariff regime, not expanding it and empowering lobbyists to exert their special interest influence.
If tariffs are ever necessary for any purposes, such as national security, these should be legislative and not executive decisions. Under Article 1, Section 8 of the Constitution, Congress has the power to levy tariffs, not the president.
To truly protect American workers and families, the 47th president must not repeat the same mistakes as the 45th — or the 46th.
The pathway to America’s golden age begins by cultivating a friendlier business environment, which requires a less burdensome tax and regulatory system, but also lower barriers to trade and investment.
It’s imperative that we think beyond the next four years, past the current wave of impetuous populism that will inevitably subside, and articulate a coherent and compelling long-term vision. As the U.S. drifts further into sub-replacement fertility, avoiding economic stagnation amid population decline will necessitate the free movement of capital, goods and services to sustain our affluence.
A durable market economy will provide the U.S. with a strategic advantage over low-fertility adversaries such as China, whose industrial policy regime is similarly failing and will drastically worsen under the economic desolation of an inverted population pyramid.
We must once again become a free-trading nation, not simply because it is utilitarian or yields for our citizens a surplus of cheap material abundance, but because it is equitable and just to American workers, businesses and consumers.
