{"id":867974,"date":"2025-08-25T23:14:23","date_gmt":"2025-08-26T04:14:23","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/08\/25\/trumps-tariffs-are-a-mess-but-are-tariffs-always-bad\/"},"modified":"2025-08-25T23:14:23","modified_gmt":"2025-08-26T04:14:23","slug":"trumps-tariffs-are-a-mess-but-are-tariffs-always-bad","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/08\/25\/trumps-tariffs-are-a-mess-but-are-tariffs-always-bad\/","title":{"rendered":"Trump\u2019s tariffs are a mess. But are tariffs always bad?"},"content":{"rendered":"
\n

Editor\u2019s note, August 7, 10:30 am<\/strong> ET<\/strong>: On August 7, Trump\u2019s tariffs went into effect for about 90 countries. The story below was originally published on April 2.<\/em><\/p>\n

Since President Donald Trump announced a slate of new tariffs on about 90 countries last week, global financial markets have tumbled. False reports about a potential pause in tariffs<\/a> gave Wall Street a brief moment of false hope on Monday, but the White House has only doubled down, threatening to add more tariffs <\/a>on China. Economists have also raised the alarm, projecting that Trump\u2019s tariffs have increased the odds of a recession<\/a>.<\/p>\n

This is just the latest update to tariff policies that have already caused a good deal of whiplash<\/a> since Trump took office in January. He threatened to impose tariffs on Colombia and canceled his plan<\/a> to do so all in a single day. He rolled out a tariff plan for Canada and Mexico, only to postpone implementing it<\/a> shortly after some tariffs went into effect. And he\u2019s been threatening both allies<\/a> and adversaries<\/a> with broad and aggressive tariffs for reasons ranging from cracking down on fentanyl<\/a> to closing a TikTok deal<\/a>.<\/p>\n

To be clear, Trump\u2019s tariff proposals are bad policy: They are far too broad, haphazard, and have confusing rationales<\/a>.<\/p>\n

But tariffs are not fundamentally unwise. \u201c\u200b\u200bThe reality is that tariffs can be, and have been, effective policy tools for promoting industrial development when they\u2019re done in a targeted strategic way and when they are matched with other complementary policies,\u201d said Adam Hersh<\/a>, a senior economist at the Economic Policy Institute.<\/p>\n

So what would good tariff policies actually look like?<\/p>\n

\n

\n

When tariffs can be good<\/strong><\/h2>\n<\/p>\n<\/div>\n

A tariff is a tax that\u2019s imposed on goods imported from other countries. Oftentimes, the cost is passed on to consumers because companies will raise their prices to offset the tax.<\/p>\n

\n

One of the biggest reasons<\/a> countries would be interested in levying a tariff is to protect domestic industries from unfair competition. Take the example of Chinese steel. China, which heavily subsidizes its steel industry<\/a>, produces more than half<\/a> of the world\u2019s steel. Because demand for steel within China has not kept pace with supply, Chinese steel has become much cheaper, potentially selling at a loss<\/a> in international markets.<\/p>\n<\/div>\n

That makes it extremely difficult for steel manufacturers elsewhere to compete, which has prompted governments to respond. Last year, the Biden administration implemented tariffs aimed<\/a> at curbing imports of Chinese steel in order to protect US manufacturers.<\/p>\n

Another example of unfair competition comes from countries with bad labor standards and very low wages. If, for example, Chinese products are cheaper than American products in part because of extremely low labor costs, the US shouldn\u2019t respond by lowering wages to keep local companies competitive. Instead of a race to the bottom, the US can respond by imposing tariffs on certain Chinese products. That allows American companies to pay their workers well without having to sacrifice their competitiveness in the market.<\/p>\n

Tariffs work best when they are tailored to a specific problem. \u201cWe have to start by making strategic choices about, \u2018What are the industries that are important to support with public policy?\u2019\u201d Hersh said. \u201cThat could be for a national security reason, it could be for an economic reason, it could be because of broader social goals like fighting the climate crisis.\u201d<\/p>\n

Other times, a country might be interested in propping up a certain sector to make the supply chain more stable. If the United States is too reliant on other countries to provide certain goods, it can be caught in a crisis when supply chains are disrupted.<\/p>\n

This was \u201ca lesson learned painfully during the COVID-19 pandemic when everyone was scrambling to source personal protective equipment (PPE), respirators, and critical medicines unavailable domestically at the necessary scale,\u201d Hersh wrote in an article with Josh Bivens<\/a>, the chief economist at the Economic Policy Institute. Tariffs, in other words, can help ensure that there isn\u2019t a monopoly over crucial imports so that supply chains aren\u2019t completely disrupted in the event of war or, as we learned in 2020, a pandemic.<\/p>\n

\n

\n

Why Trump\u2019s tariff policy is misguided<\/strong><\/h2>\n<\/p>\n<\/div>\n

On his first day back in the White House, Trump announced<\/a> that he would try to build a whole new agency called the \u201cExternal Revenue Service\u201d to collect taxes on imports. \u201cHis goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay,\u201d Commerce Secretary Howard Lutnick told Fox News in February<\/a>.<\/p>\n

But while tariffs were a main source of revenue for the US government before it introduced federal income taxes in 1913, Trump\u2019s supposed plan to replace the IRS with an External Revenue Service is a terrible idea. For starters, tariffs essentially act as a flat tax on spending, which ultimately puts a higher burden on lower-income consumers. It\u2019s also impossible for tariffs to raise nearly as much<\/a> money as income tax.<\/p>\n

This strategy also highlights why Trump\u2019s tariff proposals are so poorly planned: He simultaneously wants to raise a significant amount of money from tariffs while also pledging to get rid of tariffs if other countries agree to his terms.<\/p>\n

Trump\u2019s tariffs on China, Mexico, and Canada, for example, were placed in part, he says<\/a>, to stop fentanyl from flowing into the United States. So what would happen if those countries end up meeting Trump\u2019s demands? If Trump\u2019s plan is just to raise revenue, then clearly he wouldn\u2019t want to come to an agreement with those countries. If his plan is to curb fentanyl, then he clearly doesn\u2019t want tariffs to be a permanent source of revenue.<\/p>\n

\u201cThe Trump administration has not been targeted or strategic. They have so many different rationales for why they\u2019re pursuing tariffs, not all of them have to do with industrial revitalization,\u201d Hersh said.<\/p>\n

The broad-based approach is also expected to be seriously disruptive, spiking prices on all kinds of products all at once. Even Trump seemed to suggest that would be the case. \u201cWILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),\u201d Trump posted on Truth Social<\/a>, his social media platform. \u201cBUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.\u201d<\/p>\n

Another problem is that Trump seemingly believes that tariffs can stand on their own. But tariffs in and of themselves are not a solution. To be effective at protecting American companies and jobs, tariffs should be coupled with other policies that help spur investments.<\/p>\n

Trump has proposed repealing the CHIPS and Science Act<\/a>, which former President Joe Biden signed into law in 2022. The law invested tens of billions of dollars in America\u2019s semiconductor industry by subsidizing companies that want to build new manufacturing facilities in the United States and by funding research and development.<\/p>\n

If Trump is actually interested in using tariffs productively, he should start by first figuring out what his policy objectives actually are. He could also turn to his predecessor for answers. The Biden administration\u2019s approach<\/a> to propping up the semiconductor industry, for example, was to impose some tariffs<\/a> in addition to the CHIPS Act, using tariffs as just one tool of many to support industry growth. Trump, by contrast, wants to just rely on tariffs without committing to long-term investments. That won\u2019t deliver the same goal.<\/p>\n

Ultimately, it\u2019s important to remember that just because Trump\u2019s approach to tariffs is bombastic and unpredictable, that shouldn\u2019t necessarily be a reflection on tariffs more broadly. At the end of the day, tariffs exist for a reason, and, if implemented well, they can be a beneficial tool to shore up jobs, promote better wages, and advance national interests. \u201cWe can\u2019t judge the tool,\u201d Hersh said, \u201cby the craftsman that is mishandling it.\u201d<\/p>\n

Update, April 8, 6 am ET<\/strong>: This story was originally published on April 2 and has been updated with the latest on Trump\u2019s tariffs.<\/em><\/p>\n<\/div>\n

Abdallah Fayyad
Read More<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Editor\u2019s note, August 7, 10:30 am ET: On August 7, Trump\u2019s tariffs went into effect for about 90 countries. The story below was originally published on April 2. Since President Donald Trump announced a slate of new tariffs on about 90 countries last week, global financial markets have tumbled. False reports about a potential pause<\/p>\n","protected":false},"author":1,"featured_media":867975,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[272,163],"tags":[7553,5123],"class_list":{"0":"post-867974","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tariffs","8":"category-trumps","9":"tag-tariffs","10":"tag-trumps"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/867974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=867974"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/867974\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/867975"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=867974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=867974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=867974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}