The Challenges With Tariffs

Ryan Heshmati

November 01, 2024

Former President Trump promises to establish significant tariffs should he take back the presidency in January. Many Americans, especially those working manufacturing jobs in swing Rust Belt states, are concerned about losing their livelihoods to foreign labor; thus, protectionist policies look appealing to some. While the popularity of tariffs may be on the incline in the modern political sphere, there are serious questions about their impacts. With the country days away from a consequential election that could bring tariff policy back as a major element of American economics, analyzing tariffs, especially balancing their intent and risks, is a worthy undertaking. 

First, how can tariffs help Americans? If foreign-manufactured imports are heavily tariffed, manufacturing those same goods in the United States becomes more attractive. Consequently, in theory, tariffs can protect and even create American manufacturing jobs. This can especially appeal to those in the Rust Belt, which both parties consider a must-win. Further, proponents look to a national security angle in defense of tariffs. A reduced number of imports can mean a more self-reliant American economy, avoiding economic dependence on American adversaries.

Unfortunately, tariffs bring major concerns, too. Firstly, the only reason American manufacturing becomes more attractive to businesses when there are heavy tariffs is because high-cost American-made products are only comparatively cheaper to new higher-cost imports. As a result, consumers will likely pay the price on the retail end when these more expensive-to-manufacture goods hit the shelves. Additionally, tariffs can spark tariff wars, which involve foreign countries instituting their own tariffs on importing American-made goods as retribution. Just as American tariffs can hurt the economies of foreign nations producing and exporting goods the US tariffs the importation of, the reverse can happen, at American manufacturing’s expense.

Whether or not Former President Trump wins the election on November 5th, tariff supporters may be here to stay. With the Republican Party increasingly populist, evidenced further by moves like JD Vance’s inclusion on the 2024 ticket, there very well may be enough political will to push through heavy tariffs in an attempt to save American manufacturing. Unfortunately, while tariffs are intended to positively impact the economy with jobs, they risk doing more harm than good. Not only can they raise prices for consumers, but tariffs can also spark tariff wars, damaging American manufacturing (the opposite effect of that intended with them). Tariffs are controversial, and the ultimate impact of a tariff-focused American economy is unclear and will remain that way unless that shift actually occurs. The outcome on November 5th might be Americans’ first indication.