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Edited by: James Desio and Carter Hutchinson
Happy Thursday! In today’s newsletter, we examine the evidence against Donald Trump’s claim that tariffs will bring back US manufacturing jobs, the cost of the student loan repayment pause, and America’s strategic competition with China.

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1. Tariffs Will Not Revive US Manufacturing
Topline: Trump’s tariff plan won’t bring back US manufacturing jobs, writes <[link removed]> AEI’s Michael Strain. Over half of US imports are industrial supplies and materials, capital goods, and automotive parts. If these inputs are more expensive, tariffs will make it harder for American manufacturers to maintain low prices and expand output and hiring.

Tariff Trials: Tariffs will also raise consumer prices, slow economic growth, and increase unemployment. The trade policy being pursued by the Trump administration will reduce US producers’ competitiveness as the tariffs are not only a tax on consumption but a tax on business investment.

First Term History: Trump’s first term tariff policy provides evidence to assess the current trade conflict. US Federal Reserve economists estimate that US manufacturing job losses were five times larger than manufacturing job gains during the 2018–19 trade war.





“Trump’s tariffs are the largest peacetime tax increase in modern history, but the Constitution gives Congress, not the president, the power to raise taxes. America’s alliances will suffer, and the credibility of US global economic and financial leadership will be greatly diminished.”—Michael Strain
2. Student Loan Stress
Topline: The Trump administration announced that it will resume collections after a five-year pause on student loan payments. AEI’s Preston Cooper finds <[link removed]> that the pause, implemented at the beginning of the COVID-19 pandemic and extended eight times by the Biden administration, has caused significant damage to our nation’s student loan system and to taxpayers.

Pause Problems: More than half of borrowers are not paying their loans on time. Many of the reasons for nonpayment stem from the pause: Some borrowers are unaware that payments are due again, some are frustrated by Biden’s failure to deliver on loan forgiveness, and many await the verdicts of legal challenges to new repayment plans.

Taxpayer Costs: In the Congressional Budget Office’s June 2024 model, federal student loans are projected to cost taxpayers an additional $193 billion over the next decade, combined with the $238 billion taxpayers have already paid. The CBO projections came before the student loan repayment crisis became so apparent; Cooper forecasts that the next round of projections will only be higher. The federal government only recovers 65–75 percent of defaulted student loan balances on average.
3. US China Competition
Topline: There are many crucial areas where the US lacks urgency, resources, or competitive capacity in the US-China rivalry, writes <[link removed]> AEI’s Hal Brands. It’s unclear if the trajectory taken by Trump’s second presidency is enough to seize the advantage in our strategic competition with China.

American Allies: US policy toward China will be more successful if America has powerful allies in the region. In 2024, China spent more on defense than the next four largest nearby Asian nations (Australia, India, Japan, and South Korea) combined. Western Pacific nations largely do not prioritize military spending, and remain dependent on China for trade and technology.

Trump’s Test: US allies are also subject to Trump’s erratic approach to international engagement. The Trump administration has urged allies to counter China while also instigating trade wars and fights with Europe and even trying to take territory from other countries. China, in turn, will continue to strengthen its relationship with Russia under their “no limits” partnership. Additionally, one of the biggest challenges the US faces is that alliances are shifting on both sides.
DIVE INTO MORE DATA
Global Energy Consumption Mix <[link removed]>
Social Security Benefit Claiming over Time <[link removed]>
Special thanks to Hannah Bowen and Drew Kirkpatrick!


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