President Trump is on the hunt to restore the United States’ manufacturing prowess in global trade. To increase our country’s competitive edge, sovereignty and economic security, Trump has imposed tariffs to expunge our nation’s trade deficit. To ensure we are all on the same page, what exactly is a tariff? Tariffs are taxes charged on goods imported from other countries. The long-term goal of their implementation is to domestically manufacture the goods we tend to rely on foreign nations to provide: clothing, cars, appliances, etc. The next time you’re doing laundry, look at your clothing tags. If I were a betting woman, I would say that most of your clothes are imported from foreign countries. To put things simply, Trump wants the bulk of our clothing tags to say “Made in America.” 

This article is a comparative analysis of Trump’s tariffs, addressing the potential pros and drawbacks of implementation. I challenge you, as the reader, to abandon any biased predispositions you have in regard to this policy prior to reading. We don’t have to agree with each other’s stances, but we can attempt to understand. 

Pro-Tariff:

Trump’s tariffs are an attempt to diminish foreign reliance and enhance U.S. independence. Tariffs are a mechanism to disincentivize consumer purchases of foreign goods, so domestic markets can flourish without foreign competition. Consumers purchase goods from many Chinese e-commerce sites due to their extremely low prices. These low costs are great for us as consumers, but what are the broader implications? Let’s look at SHEIN and Temu. Given China’s high tariff rate, both of these firms had to instill price increases on their goods. But why were their goods so cheap in the first place? There are two reasons: they have cheap production inputs and they often rely on forced labor. Laborers working for SHEIN have admitted to suffering zero days off, 75-hour work weeks and extremely low wages. By reducing U.S. purchases of SHEIN and Temu goods, Trump’s goal is for us to reinvest our money in domestic goods created in an environment of ethical labor laws. Are the cheaper costs of clothing and household goods worth the exploitation of foreign laborers? Trump’s Treasury Secretary puts their position concisely: “Access to cheap goods is not the essence of the American Dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility and economic security… International economic relations that do not work for the American people must be reexamined.”

The essence of tariffs is to incentivize the expansion of our industrial capacity and employ more citizens. Since 2000, the U.S. has lost millions of manufacturing jobs due to foreign competitors. The U.S. can gain manufacturing prowess in its industrial base, thereby making U.S. exports more valuable. Let’s use a lemonade stand example: by creating my lemonade stand, it’ll be tricky in the short run to manage paying my employees on top of production costs. But in the long run, consumers are no longer buying lemonade from foreign firms with unclear labor laws. The U.S. lemonade I make can become a marketable export to other countries and increase our GDP. 

Anti-Tariff:

The reciprocal nature of Trump’s tariffs is propaganda. A truly reciprocal tariff would be the following: If Country X charges Country Y a 10% tax, then Country Y also charges Country X a 10% tax. That’s not exactly what’s going on here. The tariff rate for each country is a function of trade aggregates: the deficit with the trading partner divided by U.S. imports. In other words, the higher the trade deficit you have with us, the more you are taxed. The minimum rate charged to a trading partner is 10%. For example, Singapore has a good trade deficit with us, so they only face a minimum 10% tariff rate. As for China, we run a larger trade deficit with them, so they face a 145% tariff rate. The disparities in charged tariffs have caused conflict and stress in global trade. The U.S. creates foreign relationships through the trade exchanges we establish. By imposing direct barriers to the free mobility of capital, the U.S. is economically isolating itself from close partners who have been integrated into our supply chains for years. 

We import goods from other countries that would cost more USD to produce domestically, so this cost of isolation will fall onto the consumers. By paying more to produce domestically, consumers suffer higher prices set by firms. One could argue that increased domestic manufacturing jobs will counteract this, but that’s not what happened before. During Trump’s first term, he implemented steel tariffs to raise employment in the U.S. steel industry, but this led to an overall decline in manufacturing employment. Why? Because using steel as an input in production is now more expensive due to tariffs! The rising production costs of steel have led to a sharp decline in steel manufacturing employment. 

The big picture here is that restoring domestic manufacturing to create jobs and reduce trade deficits sounds great on the surface, but it isn’t all rainbows and unicorns. Returning to the lemonade stand example: if I open a domestic lemonade stand and place a tariff on the import of lemons, I’d create jobs. But this isn’t sustainable in the long run. How can I continue to employ workers if I can’t keep up with my production costs of lemons? I’d have to raise my lemonade prices to offset these costs. As you can see, it all boils down to the consumer paying more. 

My Thoughts: 

I’m not an economist, nor do I play one on TV. But here are my thoughts:

I am all in favor of initiatives to restore American jobs. I also think it is valuable to reassess trade relations with countries that import goods created from exploited labor. But given how ingrained imports are in our supply chain, the shocks to our economy are daunting. Low-income consumers are disproportionately affected by these higher prices. I think the best approach to restoring our industrial base is government spending and establishing job guarantee programs to provide Americans with employment in our expanding industrial capacity. I understand Trump’s intentions to restore our manufacturing prowess, but I just don’t believe the sudden tariff increases are the most effective mechanism.