Tariffs are dumb . . . right?

Boston Globe

10-04-2025

It's enough to make you wonder: How long can this tariff thing last?
On Wednesday, Trump pulled back on some of his most punitive levies. And it's not hard to imagine the next president — Democrat or Republican — making a hard pivot to free trade.
But don't count on it.
One of the most important developments in American politics over the last decade — easy to forget amid all the outrage over Trump's trade war — is the bipartisan turn to protectionism.
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The last president, Democrat Joe Biden,
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It's a desire that animates much of Washington. And it would be a mistake to discount its staying power.
When Trump leaves office, there will still be deep concern about a hollowed-out Rust Belt; when the next administration takes office, Washington will still be fretting about American reliance on Taiwanese semiconductors.
Tariffs may look ill-advised today. But they could very well be with us tomorrow.
The question is: Can they be deployed intelligently — or are they always a bad idea?
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Employees on an electric car production line near Ningbo, China, in 2021. The Biden administration put stiff tariffs on Chinese EVs and several other products.
LORENZ HUBER/NYT
The liberal case for tariffs
I meet up with Todd Tucker at a cafe in downtown Boston.
His day job is at the left-leaning Roosevelt Institute think tank in Washington. But he's in town for a fellowship at Harvard University's 'Reimagining the Economy' project.
And after we order our drinks — cappuccino for him, cup of tea for me — we dive into one of his favorite subjects: what an activist government can do to boost manufacturing.
It's called 'industrial policy.' And historically, Tucker explains, it's been seen as a tool for developing nations.
'You're some smaller country,' he says, and 'the UK, the US have these huge economies of scale. They're the powerhouses — whether it's autos, steel, whatever. And you want to find a niche in that system."
So you do two things.
First, you levy tariffs on imports from the Americans and the Brits in a bid to carve out a domestic market for your own burgeoning automakers and steel mills. Then you subsidize these up-and-coming firms in the hope of turning them into genuine competitors on the world stage.
To American policymakers, this sort of meddling in the free market long felt unfair — artificial support, they said, for foreign competitors aiming to grab some of our global market share.
But in recent years, they've started to see a place for industrial policy right here in the United States.
On the center-left, leading thinkers and politicians have taken a mounting interest in the green economy — seeing it as both an answer to climate change and a path to prosperity. And when it comes to building green technologies, Tucker says, America is something like a developing country.
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In some cases — think solar panels and electric vehicles — we're struggling to catch up with the Chinese. And in others, we're trying to invent entirely new tech.
On the right, there isn't as much interest in the green economy; in some quarters, there is outright hostility. But conservatives have an interest in reviving manufacturing more broadly. Indeed, Trump has put it at the center of his political identity.
After he took office the first time in 2017, he took a step toward industrial policy — slapping levies on Chinese steel and aluminum and promising a wave of new factory jobs in the heartland.
That didn't work out very well.
Manufacturing employment
When Biden took office in 2021, he put a more robust industrial policy in place.
After pushing some big bills through Congress — including the Inflation Reduction Act and the CHIPS Act — he poured billions of dollars into clean energy and semiconductor production.
Tariffs were part of his strategy. But they were more of 'a backstop,' Tucker argues — a way to protect the federal government's sweeping new investments in chip foundries and electric vehicle plants from Chinese competition.
Tucker, who served on Biden's transition team, considers the former president's industrial policy a success — there was a
But while he expects the jobs in those factories to be good, he's under no illusion that they will be plentiful.
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Robotics have transformed industry. Automated it. 'You're actually failing as a manufacturer,' he says, 'if year after year, you don't need fewer workers than you needed the year before.'
But even if industrial policy won't mean big job growth, Tucker says, there is a vital argument for opening new factories: national security.
The national security argument
The argument goes something like this:
The pandemic demonstrated how fragile global supply chains can be. And with climate change upon us, large-scale disruptions will only be more frequent. Building up some industrial muscle is an important hedge against instability.
Another reason to reindustrialize: Big machines on factory floors will be required to harness new forms of clean power — fusion and green hydrogen.
And more immediately, there's the matter of securing access to critical inputs like semiconductors, which power everything from televisions to cars to high-tech weaponry.
Right now, Taiwan produces more than 90 percent of the world's most advanced chips. And a Chinese invasion of that island would put the United States in a deeply vulnerable position.
But here's where the industrial policy skeptics come in.
Michael Strain, an economist with the right-leaning American Enterprise Institute, agrees that semiconductor access is a bona fide national security concern. 'But it's a long leap from that concern,' he says, 'to the judgment that semiconductor production should be relocated' to the United States.
Subsidizing factories is expensive. And there's no guarantee of success. Indeed, the Biden administration's big bet on the once mighty but now struggling Intel to turn America into a chipmaking powerhouse
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Strain argues there are cheaper ways of ensuring a domestic supply of chips, rare earth minerals, and other critical inputs. In some cases, we could stockpile. And in others, Washington could work with allies to diversify supply chains.
But we seem obsessed with reindustrialization, he says. And that's a problem.
President Trump held up a chart of what he called "reciprocal tariffs" in the Rose Garden at the White House on April 2.
Chip Somodevilla/Getty
Smokestack dreams
When Trump declared his trade war in the Rose Garden last week, he promised a 'golden age' of American prosperity.
'Jobs and factories,' he said, 'will come roaring back into our country.'
This is how protectionism is sold. Not on the finer points of semiconductor production but on the promise of reclaiming past glories: The out-of-work will get high-quality jobs on the assembly line; hollowed-out factory towns will buzz again; the awful appeal of opioids will dim.
For critics, this is the tariff argument at its most misguided.
Fewer than 1 in 10 American workers toil in factories today. And there is little reason to believe we can return to anything like the 1940s and the 1950s, when
Trump blames free trade deals like NAFTA for the steep drop in factory employment. And they surely played a role.
But they were just one of several factors that contributed to the decline in factory work. Others included automation, a growing concentration of market power in the hands of fewer firms, and shifts in tax policy and regulation.
That's a lot to overcome, tariff skeptics say. Levies won't get us there.
And besides, they say, we've transitioned. We live in a service economy now: baristas and medical assistants and IT workers. Better to pursue policies like universal child care and free community college that will help broad swaths of these workers than to chase smokestack dreams.
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'Resetting the whole paradigm'
Who will argue, then, for the Trump tariffs?
Recently, I spoke with Mark DiPlacido, who worked in the office of US trade representative Robert Lighthizer in the first Trump administration, and is now with American Compass, a leading think tank on the populist right. And he was pleased with what he's seeing.
'The president,' DiPlacido said, 'is really resetting the whole paradigm of US trade.'
He pointed out that America has a trade deficit of
Many economists will tell you that's not a problem. Our heavy spending on Chinese electronics, South Korean cars, and Italian wine is a demonstration of our wealth, they'll say.
And the fact that our trading partners take so many of our dollars and invest them right back in America — buying our stocks and real estate and even building the occasional factory here — is a show of confidence in our economy.
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But DiPlacido says that too much of that 'investment' is just a snatching up of American wealth — and that not enough of the money that flows back into the country is filtering down to working people.
The only way to confront this problem is to build more stuff, he says.
And even if factories don't employ the same number of people they once did, they can still be important anchors for local economies, DiPlacido adds. Wouldn't you rather have a factory with relatively few employees in your town than no factory at all? And wouldn't you like to keep the industrial process close so we can learn from it? So we can innovate? So we can develop new products?
The answer to these questions is surely yes. But at what cost?
If tariffs drive up the price of cars and toaster ovens, as expected — if they curb consumption and push people out of work — that will mean real pain. And it will be felt most acutely by the working people President Trump says he wants to help.
The future of tariffs
It's certainly possible that a bad experience with tariffs over these next couple of years will usher in an era of free trade.
That's happened before.
After the infamous Smoot-Hawley tariffs of 1929 deepened the Great Depression, America rejected protectionism and helped lead a global effort to lower trade barriers.
The payoff was clear. In the decades that followed, America got richer. And while the country's manufacturing sector started to slip, it was still quite strong. Prosperity was widely shared.
But things have changed.
Inequality has grown. Too many old factory towns are in ruins. And fair or not, everyone seems to blame NAFTA.
Even if Trump's tariffs fail, then, it will be difficult for policymakers to embrace a full-throated free trade agenda — to argue, in effect, that we're better off keeping most manufacturing in China and Vietnam and Mexico.
Plenty of voters will still see free trade as a root cause of our economic anxieties.
And they'll demand that those anxieties be addressed.
Congress could respond with a sweeping new package of social welfare programs. But that seems unlikely as long as the Republican Party has any sway in the House and the Senate.
No, the strategy most likely to prevail is the one with the broadest appeal. And that's industrial policy.
During the Biden administration, 17 Senate Republicans joined their Democratic colleagues to approve the CHIPS Act and 19 backed the $1 trillion Bipartisan Infrastructure Law.
The politics here are pretty straightforward. Voting for new factories — and new roads and bridges to carry the products to market — is popular.
And here's the thing: Congress doesn't even have to pass any big new industrial policy legislation in the coming years. It just has to resist Trump's entreaties to gut Biden's legacy. It just has to keep the existing industrial policy in place.
Then it can count on the next president to impose Biden-style targeted tariffs to protect those investments.
Or it can put those targeted tariffs in place itself.
As long as the levies don't wreak havoc on the global economy — and they shouldn't — the public probably won't even notice.
David Scharfenberg can be reached at