As the 2024 election approaches, the political debate surrounding Donald Trump’s tariff policies has reached a fever pitch. Vice President Kamala Harris has been vocal in condemning Trump’s tariffs, calling them a “tax on the American people” and warning of inevitable price hikes. Meanwhile, Nobel-winning economists like Joseph Stiglitz argue that such tariffs are “very bad for America and the world.” His fellow laureate, Paul Krugman, has dismissed them as “small, ugly, and stupid.” The past couple of months have only amplified these concerns, with Trump proposing significant tariffs on Mexico and Canada, announcing a 30-day “pause” on those tariffs, and discussing plans to hike tariffs on steel, aluminum, agricultural goods, and China—spurring intense debate about the real economic risks and rewards of these protectionist policies.
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While these criticisms are not without merit, particularly regarding Trump’s broad-brush approach, it’s worth considering that tariffs, when applied strategically, can be a sound and even progressive economic policy. In fact, liberals may be surprised to learn that President Joe Biden, in his administration, imposed some of the highest tariffs in recent American history—specifically a 100% tariff on Chinese-made electric vehicles. Why? Because tariffs work, and they can help rebalance the playing field for U.S. manufacturers.
Understanding Tariffs: More Than Just a Tax
At their core, tariffs are taxes on imported goods, paid by the importer. The idea behind them is simple: make foreign goods more expensive so that American-made products can better compete. This is often described as “protecting” domestic industries from foreign competition. A clear example of this can be found in the electric vehicle (EV) market. China has become a dominant player in the global EV industry, thanks to its highly cost-effective labor force. Without tariffs, U.S.-made electric vehicles would struggle to compete on price alone.
By raising tariffs on Chinese electric vehicles, Biden’s administration has effectively doubled the price of these imports, creating an opportunity for U.S. manufacturers to compete in the EV market. This targeted tariff illustrates a significant distinction between Biden’s approach and Trump’s broader, less nuanced policies.
The Difference Between Trump and Biden’s Tariff Strategies
Trump’s tariff policies, for the most part, have been country-specific rather than product-specific. For example, he has imposed across-the-board tariffs on imports from Mexico, Canada, and China, rather than focusing on specific industries or products. While such tariffs raise prices on goods from these countries, they fail to target any particular U.S. industry that could benefit from those higher costs. As a result, consumers may simply shift their purchasing behavior to take advantage of cheaper goods from other countries, bypassing U.S. manufacturers altogether.
Trump’s tariffs on steel and aluminum, however, are more targeted. By imposing tariffs on all steel imports, regardless of origin, the policy could make domestically-produced steel more competitive for U.S. buyers. Yet, these measures are still somewhat limited in their potential to foster long-term growth in the steel industry. Tariffs alone don’t improve the productivity or quality of American steel; they merely make the industry less reliant on foreign imports. Additionally, they don’t address the structural challenges that the steel industry faces, such as outdated manufacturing processes or the low wages paid to workers.
The Case for a Labor-Forward Tariff Program
A more effective tariff policy would go beyond simply raising the cost of imports. It would also include substantial investments in domestic manufacturing, infrastructure, and labor. For instance, U.S. steel manufacturers could be paired with significant public investment in infrastructure, such as bridges, highways, and rail systems—all of which require steel. By creating demand for domestically-produced steel through infrastructure projects, the government could help the steel industry grow in a way that benefits workers, not just shareholders.
However, to truly ensure that this industrial revitalization benefits American workers, the government would need to make sure that the steel companies involved provide family-sustaining wages and benefits. Additionally, these companies should be required to remain neutral in union elections to ensure that workers have a voice in improving their working conditions. Importantly, new steel plants should not be located in isolated industrial zones but in communities that have been devastated by deindustrialization. This approach would help revitalize these areas and provide much-needed jobs to people who have been left behind by global economic shifts.
The Larger Economic Picture
The importance of protecting and rebuilding American manufacturing cannot be overstated. Manufacturing is a key driver of the U.S. economy, providing high-wage jobs that support not just workers but entire communities. When a factory closes, the effects ripple through the local economy, affecting everyone from truck drivers to restaurant workers. Rebuilding manufacturing can help not only the workers in these industries but also the broader economy, creating new opportunities for growth and prosperity.
Moreover, protecting the U.S. manufacturing sector is crucial for ensuring that the country remains competitive in a rapidly evolving global economy. While it may be unrealistic to return to the industrial output of the mid-20th century, there’s no reason why the U.S. can’t recapture some of the manufacturing strength it had in the 1990s. After all, if Pearl Jam is still making albums, why can’t America still make steel?
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Tariffs as Part of a Comprehensive Economic Strategy
Tariffs should be seen as one tool in a broader industrial strategy aimed at revitalizing American manufacturing. The goal is not just to raise prices on foreign goods but to use tariffs as a way to incentivize domestic production, create jobs, and invest in infrastructure. With the right combination of policies, tariffs can become an essential part of a progressive economic agenda that benefits workers, supports high-wage industries, and builds a stronger, more resilient economy for the future.
In conclusion, while Trump’s tariffs may have been too broad and poorly implemented, the idea behind tariffs—protecting and nurturing domestic industries—can be a powerful force for good. By deploying tariffs strategically and coupling them with investments in infrastructure, labor, and manufacturing, the U.S. could begin to rebuild its industrial base and create a more equitable economy for all.