[[link removed]]

TRUMP’S TARIFFS AREN’T GOING TO WORK HOW HE THINKS THEY WILL  
[[link removed]]


 

Kate Aronoff
April 2, 2025
The New Republic
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ Supposedly, this is all going to revive domestic manufacturing. But
the evidence for that is slim, and it wouldn’t happen
overnight—especially not without other policies. At a basic level,
tariffs make stuff more expensive. _

US stock indexes tumbled on Thursday, with heavyweight technology
stocks suffering big losses, as President Donald Trump's sweeping
tariffs on major trade partners ignited fears of an all-out trade war,
and heightened the risk of a global economic recession. (Reuters/India
Today) - Image: India Today

 

The ostensible goal
[[link removed]] of
“Liberation Day,” in which the Trump administration will impose
steep, near-universal tariffs on imports, is to “make America the
manufacturing superpower of the world once again.” The theory goes
like this: Tariffs will make Americans buy fewer imported goods.
Domestic and foreign manufacturers will be incentivized to set up
plants in the United States to avoid the tariffs, revitalizing the
country’s manufacturing base and making its exports more
competitive.

“When companies realize the incentives have changed, that they’re
going to have to factor in tariffs for imports, and they’re not
going to be able to just import cheap labor also from other countries
under the president’s policies,” Mark DiPlacido, policy adviser at
the pro-Trump think tank American Compass, told
[[link removed]] _PBS
News Hour, _“these companies are going to be incentivized to invest
in the education and training that our population needs to be
successful.”

The evidence for all this is pretty thin, and it represents a strange
brew of ideological tendencies. The Trump administration’s
protectionist policies go against decades of “free trade”
orthodoxy about the promise of open borders and globalization, pushed
for decades in the U.S. by neoliberal policymakers on either side of
the aisle. Meanwhile, the administration’s vision for what happens
after those tariffs go into effect—the mechanisms by which the U.S.
will actually reindustrialize—is pure neoliberal market utopia:
Nudged in the right direction, companies will start building the
factories that will restore American greatness.

So far, this isn’t going very well. In March, the Institute for
Supply Management’s “purchasing management index”—a monthly
survey of corporate leaders indicating manufacturing
performance—dropped
[[link removed]] 1.3
percentage points below February levels to 49 percent, indicating that
manufacturing activity is contracting rather than growing. Like
the oil and gas executives now furious with Trump
[[link removed]],
those in the chemical products, electronics, metals, and machinery
businesses (to name a few) expressed worries about the uncertainty
being bred by Trump’s approach to tariffs. Survey respondents
reported that already-implemented tariffs are eating into profits and
that customers are “pulling in orders due to anxiety about continued
tariffs and pricing pressures.”

At a basic level, tariffs make stuff more expensive. Companies have
spent decades structuring production around the expectation that goods
can flow relatively freely across certain borders. Long-term corporate
planning has factored in other countries as reliable places to make
and sell products, and to source parts and machinery. GM assembles
about 30 percent of the cars it sells in the U.S. in Canada or Mexico,
but roughly 40 percent
[[link removed]] of
the parts used to make _all _cars assembled in the U.S. are made in
other countries. Some can cross borders multiple times
[[link removed]] before
landing on the sales lot as part of a finished vehicle. Tariffs might
signal that they should make more stuff in the U.S., but that can’t
happen overnight. Transforming supply chains and reallocating
production is costly and time-intensive, requiring not just billions
of dollars’ worth of investments in new plants but workers who are
trained to staff them.

Although Trump seems to see tariffs as inherently positive, they’re
hard to make sense of in the abstract. Orthodox economists tend to see
tariffs as inherently negative—inefficient disruptions to the free
flow of goods and capital. In reality, tariffs have long been a
relatively commonplace tool in economic policymaking that can take
many forms. Tariffs can be a scalpel applied to specific goods,
a sledgehammer to punish entire countries
[[link removed]],
or—as is often the case—a bit of both. If the goal is to grow
manufacturing, they’re perhaps most effectively
[[link removed]] used
alongside other industrial policy tools.

In its own quest to revitalize U.S. manufacturing, for instance, the
Biden White House maintained and even expanded
[[link removed]] several
tariffs put in place by the first Trump administration. At the same
time, it pushed Congress to spend hundreds of billions of dollars on
subsidies and R&D aimed at coaxing companies to invest in strategic
growth industries through the Inflation Reduction Act and the CHIPS
and Science Act. There are plenty of worthy criticisms of that
approach—that it was unnecessarily hawkish
[[link removed]] and
that the spending side of the equation was far too small
[[link removed]]—but
it was reasonably coherent: Penalizing cheaper, in some cases better,
foreign-made goods would buy time for fledgling domestic industries to
catch up as they took advantage of subsidies to make those same goods
at home.

The Trump administration has made clear that it’d like to repeal
[[link removed]] most
(if not all) of that spending. As DOGE takes a chain saw to federal
agencies and research bodies, it’s also dismantling state capacities
that function as in-kind support to corporations that rely on
everything from NOAA forecasts
[[link removed]] to
scientists and engineers whose education has been made possible by
the National Science Foundation
[[link removed]].
The fact that Trump is liable to tear up tariffs and announce new ones
at a moment’s notice also creates a climate of uncertainty that’s
anathema to the kinds of spending it would take to bring lots of new
manufacturing facilities online. Why, that is, would an investor or a
company plan to spend billions of dollars in response to a tariff that
might not exist next week?

Some commenters
[[link removed]] have
suggested that both tariffs and even DOGE’s slashing of federal
agencies are part of a grand, wonkish strategy
[[link removed]] to
weaken the U.S. dollar so as to lead an America First restructuring of
global trade. As economic historian Adam Tooze wrote
[[link removed]] recently,
this is wishful thinking. Searching for coherence and rationality in
the “clown car” of Trump 2.0 runs the risk of “underestimating
the radicalism of the break marked by the Trump administration.”
Instead, the White House’s approach, he argued, “may have more in
common with grift, a protection racket or a facelift pandering to the
ignorant vanity of an old man than with economic policy as we have
hitherto known it.”

The Trump administration isn’t poised to revive manufacturing so
much as reward whatever companies and executives happen to cozy up to
it and fund Republican campaigns. Life will get harder and more
expensive in the process, with few upsides for the millions it’d
like to kick off Medicaid and Social Security. The only thing
“Liberation Day” will free the country of is the expectation of
having a government that functions as anything other than a slush fund
for the president’s most enterprising sycophants.

_[KATE ARONOFF is a staff writer at The New Republic. She is the
author of Overheated: How Capitalism Broke the Planet—and How We
Fight Back
[[link removed]] and
co-author of A Planet to Win: Why We Need a Green New Deal
[[link removed]]. Kate
is also a fellow at the Roosevelt Institute, and serves
in Dissent’s editorial board.]_

* Tariffs
[[link removed]]
* Trade Tariffs
[[link removed]]
* trade war
[[link removed]]
* trade wars
[[link removed]]
* Donald Trump
[[link removed]]
* global economy
[[link removed]]
* economic recession
[[link removed]]
* Technology
[[link removed]]
* technology stocks
[[link removed]]
* stock market
[[link removed]]
* Global Markets
[[link removed]]
* Liberation Day
[[link removed]]
* manufacturing
[[link removed]]
* imports
[[link removed]]
* imported goods
[[link removed]]
* exports
[[link removed]]
* production
[[link removed]]
* economic subsidies
[[link removed]]
* agriculture
[[link removed]]
* agricultural exports
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]
Manage subscription
[[link removed]]
Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]