Why Trump and Harris Shouldn’t Embrace Tariffs

Entering the home stretch of the 2024 presidential race, former President Donald Trump is doubling down on his pledge to institute big, new tariffs if voters put him back in the White House. Recently, Trump has promised to slap 200% tariffs on tractor-maker John Deere if it manufactures in Mexico; previous commitments include slapping 60% tariffs on goods imported from China and levying tariffs of “10 percent to 20 percent… on imports from other countries.” For its part, the Biden-Harris administration has kept tariffs instituted under Trump in place (so much for political “contrasts”) and proposed other anti-trade measures targeting China. Somewhere, Bill Clinton is curled up in a ball, crying in a closet, pining for his political and economic legacy as both parties flush it all down the drain.

All this tariff-slapping chatter might make good political sense – everyone wants to stick it to China, and a bunch of swing states the candidates are fighting over are the type of terrain where terms like “NAFTA” and “WTO” are approximately as popular as syphilis.

However, it is economically dumb. Harris called tariffs a “sales tax” in her debate with Trump, and she wasn’t that far off the mark. The way tariffs work is that importers pay governments for the privilege of importing goods. But the importer doesn’t just eat the cost (importers are businesses, not charities); the cost is then passed on to consumers (many of which are, it turns out, the American manufacturing businesses that Trump and Harris purportedly want to save). This is not a coincidence or even an unwanted side effect; it is literally the whole point of tariffs as conceived of by their current advocates. Trump, Harris, and many others want to make Chinese goods, especially, as expensive as possible to try to deter American consumers from buying them and instead create an economic incentive to buy American (or perhaps not even American, but manufactured in a U.S.-friendly country or U.S. ally). This might sound lovely, but there are big problems with it.

The biggest problem with tariffs is that the whole ballgame where they are involved is to raise prices for consumers who are already pissed off about price hikes that have already occurred, especially since mid-2022—sort of like a national sales tax would.

Another is that to achieve any kind of price parity between American-made and Chinese- (or Vietnamese- or Mexican- or Brazilian- or Turkish-) made goods and truly cause consumers to start “buying American” better than 50% of the time, you’d have to drive prices up to an eye-watering level. Earlier this year, vice presidential nominee J.D. Vance said, “We believe that a million cheap knockoff toasters aren’t worth the price of a single American manufacturing job.” Cool soundbite, dude, but a site designed for people who want to “Buy American” – usalovelist.com – actually lists U.S.-made toasters; setting aside that this is probably not what you mean by “toaster,” nor is this, and nor is this unless you run a commercial kitchen, you easily see the problem by clicking through its links: The cheapest American-made toaster made by a USA Love List-listed company retails at $700. If American politicians think your average working Joe in Pennsylvania, Michigan, or Wisconsin, or even hedge fund millionaire-rich Fairfield County, Connecticut, can spend $700 on a toaster, we should probably consider having each and every one of them checked in to a mental institution.

But there are other problems, too. In some cases, while we all share the goal of weaning America off of Chinese imports because, hey, we don’t want China to have too much power over us where truly life-and-death matters are concerned, it is totally untenable to do it cold turkey.

A good example of this would be prescription drugs. Clearly, if there’s a better than zero chance we could ever end up in a major conflict with any country, we don’t want to be dependent on them indefinitely for things like, say, antibiotics. But it’s very easy to see how a too-quick-to-take-hold ban on U.S. companies buying pharmaceuticals made in China instead of making them here could result in drug shortages. Ask those of us who couldn’t find children’s Tylenol liquid a couple of cold/flu seasons back how we feel about reliving that particular hellscape (to quote my ten-year-old, “Hard pass, Mom”). Then imagine what happens when you get pneumonia, and there’s a shortage of antibiotics because, hey, no more contracting with China for drugs, and you have to drive to sixteen pharmacies while coughing up a lung, trying not to pass out, and hoping to get the pills you need…somewhere.

Here’s another example: Drones used in search and rescue operations. It turns out that American law enforcement really likes ones made in China by a company called DJI, and really doesn’t like the U.S.-made versions. Some of this is down to cost – Luis Figueiredo, a detective with New Jersey’s Elizabeth Police Department, has indicated that if law enforcement were forced to switch to U.S.-made drones, the cost would be passed on to taxpayers in the form of, you guessed it, higher taxes. But some of it also appears to be down to quality. Sgt. Travis Cook of Kentucky’s Hardin County compared DJI drones to a “Cadillac Escalade” and more expensive, U.S.-made drones to a “Ford Escort.” Florida senator and former K-9 officer Tom Wright seems to agree; he was quoted saying in a committee hearing last year, “I’m not going to let one officer risk his or her life because somebody thinks that these things talk to China.”

But, critics of free trade cry, as bad as all these tradeoffs might be, aren’t they worth it to save manufacturing jobs? The sad answer is not even just “your mileage may vary, but for most people, probably not,” it’s that free trade probably isn’t even what has been causing manufacturing job attrition over the last forty-some years. As the pro-free-trade CATO Institute’s Colin Grabow has noted, “[t]he decline in US manufacturing jobs – something that has been taking place since 1979 – is more a story of technology (robots, computers, and the like) and changing US consumer tastes than it is about trade. We know this because while the number of manufacturing jobs has declined, output has risen. Manufacturing jobs have declined abroad, too, even in China. More recent US manufacturing job gains, meanwhile, have been accompanied by stagnant industrial productivity. Most lost manufacturing jobs were claimed by automation and economic development, not Mexico and China.”

And some – though certainly not all – of these manufacturing jobs are in industries most Americans do not even want to exist in the U.S., to serve a U.S. consumer base. Grabow mentions the tobacco sector. Setting aside the fact that manifestly, Americans are smoking a lot less now than in 1979 (a good thing!), so yes, consumer choices have shut down some U.S. manufacturing right there, let’s ask ourselves this question: Do we really want a bunch of manufacturing workers churning out literal cancer sticks for our fellow Americans to consume – if hypothetically, another 20% or so of consumers decided that yeah, actually, smoking is awesome and they should pick up the habit? Again, to quote my son, “Hard pass, Mom.”

“Hard pass” should also be the answer with regard to tariffs. So, too, should be opting out of trade agreements like the TPP deal that Democrats and Republicans so lambasted back in 2016 – but which would have facilitated a rebalancing of manufacturing away from China and strengthened the hands of countries friendly to the U.S. in Asia. Maybe whichever of Harris or Trump is elected will get there, and tariffs will magically become uncool again as soon as hard economic facts, as opposed to grabbing every potential vote in Rustbelt states, become a priority in, say, December – though Trump’s history shows a lengthy love affair with tariffs, and Harris’ history on this and other issues is really a big, fat question mark.

But in any event, that’s assuming that politicians learn to do the math and stop feeling the incentive to pander to a lot of voters who, yes, have seen their economic fortunes decline in the last forty-some years but have largely confused correlation with causation – and then allowed that to dictate their political views. Hope springs eternal. But hope is also not a strategy, and American consumers would be well advised to prepare for even more price hikes in 2025.