To offer a counter-view, tariffs can function as an essential tool to protect American industries and jobs. Global free trade is idealized, as it can and has hurt domestic industries where foreign competitors exploit trade imbalances (e.g. manufacturing, automakers, agriculture, pharmaceuticals, renewable energy, consumer goods, etc.). President Trump's recent tariffs on Canada and Mexico may very well prove to be a necessary measure in order to safeguard the aforementioned domestic sectors from unfair competition. In a 2019 report from the U.S. International Trade Commission (USITC), steel and aluminum tariffs aimed to protect domestic production, as it had been heavily undercut by low-cost foreign imports from China. The DoD has noted time and again, that over-reliance on foreign suppliers for critical materials can compromise national security.
Regarding Reagan: his free trade stance was not absolute, he implemented protectionist policies when they aligned with national interests (e.g. 1983 tariffs on Japanese motorcycles). Trump's tariffs, however disruptive, possess similar goals of sector revitalization (steel, aluminum, textiles, electronics), a vital component of domestic infrastructure and security. Moreover, the renegotiation of NAFTA into the USMCA was design to reflect contemporary realities of international trade, adding stronger labor and environmental provisions to protect U.S. interests. The Peterson Institute for International Economics points out how this recent iteration provides superior IP and labor rights clauses, both of which benefit the American workforce.
On retaliation: while Canada and Mexico may impose tariffs on U.S. goods, this is a common consequence in trade negotiations, which have historically sparked new negotiations with better terms (e.g. the 1930s Smoot-Hawley Tariff sparked retaliatory actions initially but led to trade policy shifts in the long run). I think the long-term benefits of more equitable trade agreements, even at the cost of short-term disruption, strengthen our global position. In essence, these tariffs function as a strategic tool to protect domestic interests. Empirical evidence suggests that the economy can benefit from these policies over time, as trade deficits will be reduced, fairer trade practices will be encouraged, and more resources will be invested internally to effectively compete against foreign imports.
To push back a little bit on this, I think it’s questionable whether tariffs even achieve their desired effect. The argument from Trump’s pro-tariff agenda (and to a lesser degree, Biden’s “Made in America” initiative) is that protectionist trade policy helps domestic industries. But domestic manufacturers often import raw materials from foreign countries, driving up costs for those domestic manufacturers. Some of these costs will be passed onto U.S. consumers. If American companies are now paying more for materials, are they really better off? Take the first Trump admin’s steel tariffs, for example: Economic data indicates that the tariff-induced costs to American industries and consumers vastly exceeded whatever gains those tariffs were supposed to accomplish because American steel companies were incapable of reaching American steel-consumers' demand for steel. (https://www.cato.org/blog/more-costly-steel-tariffs-horizon). Trump’s steel tariffs, designed to help those American steel companies, didn’t change that.
You cite the Peterson Institute, but they found last month that with Trump’s 25 percent tariffs on Mexico and China, “US GDP would be around $200 billion lower than it would have been without the tariffs.” (https://www.piie.com/blogs/realtime-economics/2025/trumps-threatened-tariffs-projected-damage-economies-us-canada-mexico). That’s partly because, as the Cato Institute’s Scott Lincicome noted, “tariffs are paid by American consumers in two ways: a visible tax on imports and an invisible tax on U.S.-made goods, with the latter simply paid directly to producers (via higher prices) instead of to the U.S. Treasury.” (https://thedispatch.com/newsletter/capitolism/lessons-trump-pause-tariffs-mexico-canada-2/). What some may view as unfair competition, in practice, keeps prices down for both domestic producers and consumers. Even an empty threat of tariffs can cause price hikes. As Lincicome explained, “traders and sellers in the U.S. market will often increase prices if they see additional tariffs coming, and—adding insult to injury—will often reduce prices more slowly … if the tariffs never materialize or are later removed.”
I also think it’s worth questioning whether so-called exploitative trade deficits are truly exploitative. As P.J. O’Rourke once wrote about the trade deficit, “An international current account deficit is not comparable to a private debt. Hu Jintao is not going to show up at my door threatening to repossess my DVD player because he has a fifty-dollar bill that I owe on.” Indeed, trade deficits are influenced more by macroeconomic trends and monetary policy than trade policy. For example, as my Dispatch colleague Kevin Williamson pointed out, the U.S.’s “strong dollar tends to increase trade deficits by making U.S. exports to the world relatively expensive and imported foreign goods relatively cheap for dollar-holding Americans.” (https://thedispatch.com/newsletter/wanderland/zombie-dick-gephardt-protectionism-2/)
Lastly, you say that tariffs help produce more “equitable trade agreements,” but what is more equitable or fair than having the freedom to buy or sell the goods one prefers? Do we really need to look to the government to tell American consumers which businesses they should support?
When a Connecticut consumer chooses to purchase food produce from California, that’s the consumer making a consumer preference, not active exploitation of Connecticut farmers. Why should that be any different when the Connecticut consumer purchases food produce imports from Mexico or Canada? Especially considering that some produce imports (for example, avocados) aren't grown by Connecticut farmers. Getting rid of Mexican avocados through tariffs won’t exactly motivate Connecticut farmers to start growing avocados.
Peter, that are valid points raised by you regarding the potential drawbacks of tariffs, however, I believe there are fundamental aspects in which you and Leo are overlooking.
Yes, tariffs will raise costs for domestic manufacturers initially, because they import raw materials internationally, and this may, for the short-term, increase consumer prices. However, tariffs on key industries (e.g. steel) have historically provided long-term competitive advantages by protecting critical sectors from unfair competition, bolstering domestic production. In 2019, the National Bureau of Economic Research found that U.S. steel tariffs helped boost domestic production by 10%, even as some industries paid higher input costs. This should not be ignored, as strengthening blue-chip American industries will not only help to preserve (and perhaps, grow) jobs, but it allows for the U.S. to avoid dependency on foreign supply chains, all of which are inherently risky during our increasingly heated geopolitical timeline (which yes, predates Trump's 2024 election victory, but is certainly not cooled down by his presence). Moreover, as aforementioned, tariffs may raise consumer costs in certain areas, but they can also assist in shifting the composition of demand and production domestically, benefitting certain industries. As the Cato Institute's V.P. of Economics, Scott Lincicome, noted on Trump's steel tariffs, (paraphrasing here) they provided steel producers with the necessary breathing room to improve their production capabilities. In essence, tariffs on steel and aluminum are and continue to function as a long-term strategy intended to counteract practices such as China's "dumping" of cheap, subsidized steel, which serves to undermine U.S. industry.
The Peterson Institute report you cited does indeed show that Trump's tariffs had an economic cost, however, the analysis fails to account for the broader strategic benefits. One of the more salient points I've come across recently, raised by Dartmouth/WSJ economist Douglas Irwin, read that trade protectionism, when targeted at "non-equitable" or "unfair" practices like I.P. theft or currency manipulation, can help to foster fairer competition which will benefit the U.S. in the long-run. Trump's tariffs are part of a wider diplomatic toolkit which will incentivize trade partners to engage in more balanced agreements, like the U.S.M.C.A. Furthermore, Harvard economist Robert Lawrence recently highlighted that trade policies ought not only be evaluated solely by their short-term impact on GDP, but by the overall health of strategic sectors, like manufacturing. Yes, some industries can and will face short-term disruptors due to the higher input costs, but a more robust industrial base will ensure long-term economic resilience. Aaron Flaeen, the principal economist for the Fed's board of governors, suggests that the impact on consumer prices is almost always less severe than feared, as organizations adjust on-the-fly by absorbing costs and shifting production methodologies.
Peter, the argument that trade deficits are not inherently harmful is valid in a number of respects. Deficits can be driven by exchange rates and monetary policy, however, this still fails to acknowledge the role of foreign trade practices which distort balance. As former U.S. Trade rep. Robert Lighthizer has emphasized in recent weeks, trade deficits (namely with countries like China), are not simply a product of the USD's strength, but of asymmetric policies, wherein one side (e.g. China), engages in practices including currency manipulation or state subsidization to outcompete U.S. producers. Tariffs, in this context, function as a mechanism to combat unfair practices in order to restore a more level playing field.
The notion that tariffs infringe upon consumer choice is actually more nuanced than it appears. The concern here is not restricting the options of the American citizenry, but ensuring that the market operates on a fairer basis. Dani Rodrik argues that fair trade is essential to ensuring all participants in a global marketplace have access to equitable opportunities. Thus, by curbing what is, in essence malpractice (dumping and IP theft), tariffs aim to provide equal footing for consumers and producers. The goal is not to prevent American's from buying foreign goods (Mexican avocados), but simply to ensure they are not unwittingly supporting foreign governmental practices which disadvantage American industries and workers. And you are right! Many goods, such as avocados, may not be domestically produced, but this is turning a blind eye to the larger principle that some industries require protection in order to maintain long-term viability. For instance, domestic manufacturing in high-tech industries (e.g. semiconductor production) is critical for our national security. Thus, by ensuring that the U.S. maintains its production capacity in these key sectors, the government secures an industrial base which is better prepared to weather future disruption from black-swan events like global pandemics and geopolitical conflict.
I agree valid concerns exists about the potential for tariffs to raise costs, but these must be seriously weighed against the protracted, broader benefits. Evidence suggests that tariffs aid in protecting critical industries whilst reducing dependency on foreign nations whose current modus operandi may not be just when it comes to trade. I think protectionism, when strategically applied, will drive American innovation, safeguarding vital segments of the U.S. economy.
You make some good points. I would argue that with Reagan, while he did impose some tariffs on Japanese goods, he said that for him, it was a last resort, and that he hoped to fix it because he ultimately believed that starting trade warfare with our allies usually leads to more harm than good. Overall, I feel the same way about tariffs. In the long-term, they may work out, but I am skeptical about how much the ends really justify the means, if at all. Nonetheless, I really appreciate these counterpoints. We'd love for you to expand on this in an article of your own if you feel so inclined!
To offer a counter-view, tariffs can function as an essential tool to protect American industries and jobs. Global free trade is idealized, as it can and has hurt domestic industries where foreign competitors exploit trade imbalances (e.g. manufacturing, automakers, agriculture, pharmaceuticals, renewable energy, consumer goods, etc.). President Trump's recent tariffs on Canada and Mexico may very well prove to be a necessary measure in order to safeguard the aforementioned domestic sectors from unfair competition. In a 2019 report from the U.S. International Trade Commission (USITC), steel and aluminum tariffs aimed to protect domestic production, as it had been heavily undercut by low-cost foreign imports from China. The DoD has noted time and again, that over-reliance on foreign suppliers for critical materials can compromise national security.
Regarding Reagan: his free trade stance was not absolute, he implemented protectionist policies when they aligned with national interests (e.g. 1983 tariffs on Japanese motorcycles). Trump's tariffs, however disruptive, possess similar goals of sector revitalization (steel, aluminum, textiles, electronics), a vital component of domestic infrastructure and security. Moreover, the renegotiation of NAFTA into the USMCA was design to reflect contemporary realities of international trade, adding stronger labor and environmental provisions to protect U.S. interests. The Peterson Institute for International Economics points out how this recent iteration provides superior IP and labor rights clauses, both of which benefit the American workforce.
On retaliation: while Canada and Mexico may impose tariffs on U.S. goods, this is a common consequence in trade negotiations, which have historically sparked new negotiations with better terms (e.g. the 1930s Smoot-Hawley Tariff sparked retaliatory actions initially but led to trade policy shifts in the long run). I think the long-term benefits of more equitable trade agreements, even at the cost of short-term disruption, strengthen our global position. In essence, these tariffs function as a strategic tool to protect domestic interests. Empirical evidence suggests that the economy can benefit from these policies over time, as trade deficits will be reduced, fairer trade practices will be encouraged, and more resources will be invested internally to effectively compete against foreign imports.
To push back a little bit on this, I think it’s questionable whether tariffs even achieve their desired effect. The argument from Trump’s pro-tariff agenda (and to a lesser degree, Biden’s “Made in America” initiative) is that protectionist trade policy helps domestic industries. But domestic manufacturers often import raw materials from foreign countries, driving up costs for those domestic manufacturers. Some of these costs will be passed onto U.S. consumers. If American companies are now paying more for materials, are they really better off? Take the first Trump admin’s steel tariffs, for example: Economic data indicates that the tariff-induced costs to American industries and consumers vastly exceeded whatever gains those tariffs were supposed to accomplish because American steel companies were incapable of reaching American steel-consumers' demand for steel. (https://www.cato.org/blog/more-costly-steel-tariffs-horizon). Trump’s steel tariffs, designed to help those American steel companies, didn’t change that.
You cite the Peterson Institute, but they found last month that with Trump’s 25 percent tariffs on Mexico and China, “US GDP would be around $200 billion lower than it would have been without the tariffs.” (https://www.piie.com/blogs/realtime-economics/2025/trumps-threatened-tariffs-projected-damage-economies-us-canada-mexico). That’s partly because, as the Cato Institute’s Scott Lincicome noted, “tariffs are paid by American consumers in two ways: a visible tax on imports and an invisible tax on U.S.-made goods, with the latter simply paid directly to producers (via higher prices) instead of to the U.S. Treasury.” (https://thedispatch.com/newsletter/capitolism/lessons-trump-pause-tariffs-mexico-canada-2/). What some may view as unfair competition, in practice, keeps prices down for both domestic producers and consumers. Even an empty threat of tariffs can cause price hikes. As Lincicome explained, “traders and sellers in the U.S. market will often increase prices if they see additional tariffs coming, and—adding insult to injury—will often reduce prices more slowly … if the tariffs never materialize or are later removed.”
I also think it’s worth questioning whether so-called exploitative trade deficits are truly exploitative. As P.J. O’Rourke once wrote about the trade deficit, “An international current account deficit is not comparable to a private debt. Hu Jintao is not going to show up at my door threatening to repossess my DVD player because he has a fifty-dollar bill that I owe on.” Indeed, trade deficits are influenced more by macroeconomic trends and monetary policy than trade policy. For example, as my Dispatch colleague Kevin Williamson pointed out, the U.S.’s “strong dollar tends to increase trade deficits by making U.S. exports to the world relatively expensive and imported foreign goods relatively cheap for dollar-holding Americans.” (https://thedispatch.com/newsletter/wanderland/zombie-dick-gephardt-protectionism-2/)
Lastly, you say that tariffs help produce more “equitable trade agreements,” but what is more equitable or fair than having the freedom to buy or sell the goods one prefers? Do we really need to look to the government to tell American consumers which businesses they should support?
When a Connecticut consumer chooses to purchase food produce from California, that’s the consumer making a consumer preference, not active exploitation of Connecticut farmers. Why should that be any different when the Connecticut consumer purchases food produce imports from Mexico or Canada? Especially considering that some produce imports (for example, avocados) aren't grown by Connecticut farmers. Getting rid of Mexican avocados through tariffs won’t exactly motivate Connecticut farmers to start growing avocados.
Peter, that are valid points raised by you regarding the potential drawbacks of tariffs, however, I believe there are fundamental aspects in which you and Leo are overlooking.
Yes, tariffs will raise costs for domestic manufacturers initially, because they import raw materials internationally, and this may, for the short-term, increase consumer prices. However, tariffs on key industries (e.g. steel) have historically provided long-term competitive advantages by protecting critical sectors from unfair competition, bolstering domestic production. In 2019, the National Bureau of Economic Research found that U.S. steel tariffs helped boost domestic production by 10%, even as some industries paid higher input costs. This should not be ignored, as strengthening blue-chip American industries will not only help to preserve (and perhaps, grow) jobs, but it allows for the U.S. to avoid dependency on foreign supply chains, all of which are inherently risky during our increasingly heated geopolitical timeline (which yes, predates Trump's 2024 election victory, but is certainly not cooled down by his presence). Moreover, as aforementioned, tariffs may raise consumer costs in certain areas, but they can also assist in shifting the composition of demand and production domestically, benefitting certain industries. As the Cato Institute's V.P. of Economics, Scott Lincicome, noted on Trump's steel tariffs, (paraphrasing here) they provided steel producers with the necessary breathing room to improve their production capabilities. In essence, tariffs on steel and aluminum are and continue to function as a long-term strategy intended to counteract practices such as China's "dumping" of cheap, subsidized steel, which serves to undermine U.S. industry.
The Peterson Institute report you cited does indeed show that Trump's tariffs had an economic cost, however, the analysis fails to account for the broader strategic benefits. One of the more salient points I've come across recently, raised by Dartmouth/WSJ economist Douglas Irwin, read that trade protectionism, when targeted at "non-equitable" or "unfair" practices like I.P. theft or currency manipulation, can help to foster fairer competition which will benefit the U.S. in the long-run. Trump's tariffs are part of a wider diplomatic toolkit which will incentivize trade partners to engage in more balanced agreements, like the U.S.M.C.A. Furthermore, Harvard economist Robert Lawrence recently highlighted that trade policies ought not only be evaluated solely by their short-term impact on GDP, but by the overall health of strategic sectors, like manufacturing. Yes, some industries can and will face short-term disruptors due to the higher input costs, but a more robust industrial base will ensure long-term economic resilience. Aaron Flaeen, the principal economist for the Fed's board of governors, suggests that the impact on consumer prices is almost always less severe than feared, as organizations adjust on-the-fly by absorbing costs and shifting production methodologies.
Peter, the argument that trade deficits are not inherently harmful is valid in a number of respects. Deficits can be driven by exchange rates and monetary policy, however, this still fails to acknowledge the role of foreign trade practices which distort balance. As former U.S. Trade rep. Robert Lighthizer has emphasized in recent weeks, trade deficits (namely with countries like China), are not simply a product of the USD's strength, but of asymmetric policies, wherein one side (e.g. China), engages in practices including currency manipulation or state subsidization to outcompete U.S. producers. Tariffs, in this context, function as a mechanism to combat unfair practices in order to restore a more level playing field.
The notion that tariffs infringe upon consumer choice is actually more nuanced than it appears. The concern here is not restricting the options of the American citizenry, but ensuring that the market operates on a fairer basis. Dani Rodrik argues that fair trade is essential to ensuring all participants in a global marketplace have access to equitable opportunities. Thus, by curbing what is, in essence malpractice (dumping and IP theft), tariffs aim to provide equal footing for consumers and producers. The goal is not to prevent American's from buying foreign goods (Mexican avocados), but simply to ensure they are not unwittingly supporting foreign governmental practices which disadvantage American industries and workers. And you are right! Many goods, such as avocados, may not be domestically produced, but this is turning a blind eye to the larger principle that some industries require protection in order to maintain long-term viability. For instance, domestic manufacturing in high-tech industries (e.g. semiconductor production) is critical for our national security. Thus, by ensuring that the U.S. maintains its production capacity in these key sectors, the government secures an industrial base which is better prepared to weather future disruption from black-swan events like global pandemics and geopolitical conflict.
I agree valid concerns exists about the potential for tariffs to raise costs, but these must be seriously weighed against the protracted, broader benefits. Evidence suggests that tariffs aid in protecting critical industries whilst reducing dependency on foreign nations whose current modus operandi may not be just when it comes to trade. I think protectionism, when strategically applied, will drive American innovation, safeguarding vital segments of the U.S. economy.
You make some good points. I would argue that with Reagan, while he did impose some tariffs on Japanese goods, he said that for him, it was a last resort, and that he hoped to fix it because he ultimately believed that starting trade warfare with our allies usually leads to more harm than good. Overall, I feel the same way about tariffs. In the long-term, they may work out, but I am skeptical about how much the ends really justify the means, if at all. Nonetheless, I really appreciate these counterpoints. We'd love for you to expand on this in an article of your own if you feel so inclined!