You do not need an economics professor to tell you that tariffs are generally poor economic policy. Despite that, the downsides of tariffs — including deadweight loss and possible retaliation — were a daily topic of conversation in my economics class, Global Trade and Finance. So, you can imagine my shock when President Donald Trump, who made massive tariffs a centerpiece of his campaign, won the 2024 presidential election in which 31% of voters named the economy as their most important issue in exit polls.
During the campaign and in the lead up to his inauguration, President Trump promised a 60% tariff on China and 25% tariff on both Canada and Mexico if their governments did not stymie the flow of drugs and migrants across the border. He later threatened Denmark with tariffs if they did not give up control of Greenland. However, since the inauguration he has balked on his threats, refusing to give a clear timeline for tariffs on China while pledging to place tariffs on Canada and Mexico by Feb. 1. While these threats have clarified what Trump’s tariff regime may look like, the current delays have also given some credibility to the theory that his tariff threats are not meant to be put into place but rather serve only to elicit concessions from countries. Either way, these tariffs will be bad for our country. If Trump enacts these tariffs, they will not only harm American consumers and global markets, but also the continual threat of tariffs damages the discussion surrounding free trade in the United States.
Almost any tariff that Trump chooses to impose will undoubtedly harm American consumers. Estimates have shown that Trump’s proposed tariffs would cost consumers $1,200 on average in purchasing power, decreasing the amount of goods that consumers can afford. In Georgia, tariff payments would increase by an amount of over 2% of the state's gross domestic product, directly affecting spending and consumption in the state. Tariffs would also have a negative impact on American businesses and jobs. Retaliatory tariffs, which Mexico has already threatened, will only further hurt American consumers and companies through increasing prices and decreasing trade. If Trump really wants to put pressure on Canada, Mexico or Denmark, he must find a mechanism that will not harm the American people.
While Trump repeatedly made tariff threats both during the campaign and as president-elect, observers were quick to point out that during his first administration he threatened many more tariffs than actually imposed. By moving the goalposts from inauguration day to Feb. 1, it seems like this trend is only continuing. On the campaign trail, Trump claimed tariffs would revive U.S. manufacturing by protecting manufacturers and bringing their production and jobs back to the United States as well as generate substantial federal revenues. Now that his attention has turned toward using tariff threats to elicit concessions, as in the case of Mexico, Canada, and Denmark, it is possible that just like in his first term, widespread tariffs will not actually be imposed — even in the name of promoting U.S. manufacturing or reviving America’s heartland. Even if this is the case, Trump’s tariff threats and anti-trade rhetoric are harmful and antithetical to finding solutions to help displaced workers and communities.
While Trump blames free trade for declines in American manufacturing and the plight of unemployment and poverty facing rural communities, that is not the full story. In reality, both trade advances and technological changes have contributed to manufacturing’s decreasing share of total U.S. employment. While trade creates net benefits for participating countries, its benefits are not always distributed equally. American manufacturers and their employees have been bigger losers from American free trade than other groups. However, a revival of pre-globalization manufacturing through tariffs is not the best way to help those negatively affected by trade. In fact, a study found that the tariffs the first Trump administration enacted — which were originally meant to restore the washing machine manufacturing industry — actually cost consumers $815,000 per job created. While the tariffs created 1,800 jobs, the tariff cost consumers $1.5 billion annually. With that being said, trade has created new and better opportunities for American workers, which the government can help workers attain.Thus, rather than ballooning tariffs, the solution to helping workers and communities is through redistributing the benefits gained by trade.
If Trump truly wants to help Americans, he must invest in job retraining programs. For example, reviving the Trade Adjustment Assistance for Workers program or creating a similar initiative would assist unemployed workers with retraining, healthcare and job searches. The program stopped accepting applications in 2022, but reviving it could help workers who have lost their jobs due to trade. Trump could also help workers transition into higher-paying jobs generated by trade by investing in higher education. Additionally, outside of training and skill attainment, it is essential for Trump to tackle the opioid crisis facing America, as it disproportionately harms the manufacturing communities which Trump claims tariffs will help.
There are effective steps which Trump can take to help workers and communities affected by trade — but tariffs are not one of them. By placing tariffs on foreign goods and services, Trump backstabs the working class that helped elect him into office. Even if Trump’s tariff threats are only threats, they still serve to distract from actual solutions which will help Americans. As long as the public debates the merits of tariffs to revive American communities, it will fail to pay attention to real and effective solutions. For example, Trump’s threats to axe the U.S. Department of Education fail to recognize the role that the department could play in investing in the rural and disaffected communities impacted by trade. In the absence of productive discussion surrounding how to distribute the benefits of trade, caused by an overreliance on tariff-related rhetoric, these futile and hypocritical actions will only continue.
Luckily, Trump’s cabinet pick for the U.S. Department of Labor, Congresswoman Lori Chavez-DeRemer (R-Oreg.), has already pledged to invest in training and apprenticeship programs. Additionally, Trump’s pick for Secretary of Health and Human Services, Robert F. Kennedy Jr., has announced his intention to bring more attention to the opioid crisis in the United States, drawing upon his past experiences of addiction. The pieces are in place for Trump and Congress to take effective action but only if the conversation turns away from tariffs and toward actual solutions. Trump's tariff threats, if carried out, will be disastrous for the American economy. Even if they are not implemented, their looming shadow in domestic development discussions will impede economic progress.
Contact Pierce McDade at pmcdade@emory.edu
