Will the Trump tariffs work? A word of support

Before this month, there were few topics more likely to end a conversation than tariffs—even perhaps in a room full of economists, who have given them little attention in recent decades. Since April 2, however, “Liberation Day,” as President Trump dubbed it, Americans of every walk of life have found themselves hotly debating this formerly arcane subject. Stock markets have plunged and soared, news anchors have fumed and fulminated, professional economists have hurled schoolboy insults at one another on X—but many of us, I suspect, are still a little dazed and disoriented.

Part of that, to be sure, can be chalked up to the somewhat erratic rollout, then rollback, then ramp-up of the various tariff rates, and discordant messaging from inside the Trump administration. It hasn’t always been clear even for those close to the decision-makers exactly what the objectives are, and whether the various tariffs announced are likely to achieve or thwart those objectives. Still, the basic logic of the administration’s strategy seems clear enough, and has real potential to reset a global economic order that has become increasingly broken over the past three decades.

First of all, it’s worth noting that tariffs are nothing new in U.S. history, or Western economic history more generally. Before the end of World War II, the average U.S. tariff rate on all imports was almost always north of 10%, and sometimes as high as 50%—compared with the 1.5% when President Trump first took office in 2016. The currently estimated effective tariff of 28% falls close to that which prevailed during America’s greatest period of economic growth and industrialization, 1870-1910, when it became the world’s most powerful economy. Although correlation certainly does not always equal causation, it’s worth noting that many other major modern economic success stories have taken place in high-tariff regimes: the rise of Germany and Japan to become industrial powerhouses in the late 19th century, and the rise of East Asian economies like South Korea and China in the late 20th century.

While many economists argue that free trade always pays off because it allows countries to specialize in producing those goods they can make best and most cheaply, this ignores the fact that sometimes you need time to learn how to make things well and cheaply. Tariffs are often designed as “infant industry protections,” to give inefficient domestic industries time to build up until they are ready to surpass foreign competition. Given that U.S. manufacturing employment has suffered a devastating decades-long decline, depriving many communities of one of the best sources of stable, family-friendly jobs, Trump’s gamble to hoist a flat 10% global tariff to encourage such re-industrialization certainly isn’t crazy.

That said, while using tariffs to incentivize “made in America” obviously doesn’t make sense in all cases, it’s unquestionably a smart policy when it comes to industries critical for national security. That includes not just weapons systems but pharmaceuticals, advanced technology, shipbuilding, and more—all industries where the United States has casually offshored a vast proportion of our industry to China since the 1990s. This isn’t because China has been winning on a level playing field through cheaper labor, but because they have been rigging the game; as Henry Gao writes in Commonplace, the massive imbalances in U.S. trade are the product of “China’s state capitalism—a system that fused the coercive power of the state with market tools to siphon off capital and jobs from the West while flooding the world with underpriced exports, distorting markets and corroding trust in the global trading system.” Trump’s massive, punitive tariffs against Chinese imports are an attempt to push a hard reset button to end U.S. dependency on a geopolitical foe—the equivalent of making a drug addict go cold turkey.

But what about the “reciprocal tariffs” on other global trading partners, many of them friends? While these have been something of a moving target, Trump’s recent 90-day pause on these suggests a powerful strategy, as Gao writes: Use the threat of these tariffs to force other countries to the negotiating table so they work with us to isolate China, rather than working with China to isolate us, as Beijing is trying hard to achieve. This won’t be easy, but it’s certainly worth a shot.

If these gambles pay off, the result could be a huge win for American workers and for America’s long-term economic security. For decades, we’ve financed the globe’s most lavish consumer lifestyle for wealthier Americans by borrowing huge sums from foreign rivals to keep buying their gadgets, all the while forgetting even how to make things here in America, and leaving poorer Americans in hollowed-out towns with dying industries. The much-needed reset will certainly be a shock to the system, and it may require rethinking our economic priorities—but if the administration can pull it off right, it may give our children the chance to inherit a stronger and healthier society.