In the first few weeks of his second term, President Donald Trump has resumed his advocacy for a renegotiation of trade deals, namely with Canada, Mexico and China. While the tenor of Trump’s discourse on trade is ideological, the justification for trade protectionism and the subsequent levying of punitive tariffs on imported goods is based on their potential benefit to American workers, manufacturers, and consumers. However, with the bluster and pace of policy changes combined with a lengthy history from his first term as evidence, were tariffs on China in alignment with America’s national interests? I argue that what is past is prologue.
Tariffs and Protectionism: What Does History Tell Us?
Starting with the broadest view of trade, tariffs no longer serve the same interests or aims as they once did, and the policy platforms of the two major political parties have spun almost 360 degrees since the last era of protectionism in the early 20th Century. One does not need to look far to discover that in the 19th Century, Republicans believed that high import tariffs were essential to a robust foreign policy, while the Democrats were firmly in the free trade camp. Some of the motivations were just as evident as today, with stark divisions between the two parties on trade policy and it being a policy narrative that is essential to the maintenance of electoral coalitions and constituencies.
The post-Cold War environment led to a drop in the need for protectionism, as access to U.S. markets and the growth of exports were synonymous with American economic interests. And while there were costs to liberalization of trade, such a foreign competition, the wider process of globalization set into motion a global free market system that has led to a worldwide economic boom, with most countries benefiting. And it was free markets that arguably collapsed the Soviet system. Under Trump, America has now come full circle.
China, Trump and Winning
Since Trump views China as America’s predominant foe, are tariffs they key to “winning” and in the national interest? For workers, the answer is a resounding no. The results from the Administration in the past overwhelmingly point to the manufacturing sector, where one can make a case that tariffs and protectionism have saved middle-class jobs, particularly in the steel industry, but even after tariffs were placed on foreign steel in 2018, the number of steel jobs declined.
The secondary source relied upon by Trump is related to the electronics sector and the so-called “shock” of increased Chinese competition. And again, more rigorous analysis suggests this is incorrect. A 2019 National Bureau of Economic Research (NBER) study found that there was no evidence of net U.S. job losses resulting from China “shock”. Instead, most of the losses were caused by existing businesses that repurposed their operations to services in research, management, and wholesale.
Related sectors that straddle industries like minerals and agriculture have repeatedly warned about the consequences of Trump’s tariff policies, including John Deere, which was met with threats by Trump the candidate in 2024.
It Doesn’t Put America First
The last leg of Trump’s rationale is the detriment to the American consumer, which an array of studies found negatively impacted consumers. A 2018 study found that import tariffs on China, the EU, India, Mexico and other countries found that collectively the costs were $3.2 billion per month by December 2018 and another $1.4 billion per month in welfare efficiency losses.
Another 2021 study by two London-based economists found that Trump tariff policy cost American families over $460 per year. And most recently, Trump’s Executive Order issuing a 10% tariff on China also eliminated the “de minimis” exemption on smaller goods of less than $800, which caused havoc as shipping companies had to adjust to the new rule, charging higher import duties and processing fees.
The U.S. Postal Service temporarily stopped accepting packages from China and Hong Kong to adjust for the new rules. But again, who paid ultimately paid the tariff? The American consumer. Thus, if the “national interest” is defined squarely in what is in the interest of “America First,” rhetoric and the policy are entirely out of alignment, as Americans—broadly defined—clearly do not reap the benefits.
