Trump's tariffs are hurting Tennesseans and the local economy. Here's how

Yahoo

06-05-2025

U.S. Representative John Rose argues in his recent Tennessean op-ed that Tennessee's manufacturing sector thrives under President Donald Trump's economic policies, celebrating his tariffs as a boon for local producers.
Yet over 1,700 economists disagree, seeing no credible economic justification for tariffs, and warning that they will only prop up inefficient producers at the expense of more efficient industries. This will undermine economic efficiency, employment, and wage growth here in Tennessee.
Economists aren't convinced by any of the three justifications the Trump Administration advances for tariffs. More concerning, however, is that each one is mutually exclusive, meaning Trump can't possibly pursue more than one of these goals without undermining the other two.
If Trump's goal is job protectionism, then tariffs must be high enough to force Americans to buy American. However, this means no tariff revenues will be collected because Americans will not purchase foreign goods. If revenue is the goal, then tariffs must be low enough so Americans will still pay the tax, which means they will not protect American jobs. If negotiation towards free trade is the goal, then neither job nor revenue objectives will be achieved.
Let's assess why economists don't buy Trump's justifications for tariffs:
Tariffs cause job loss, not protection
Tariffs protect some American jobs in a few sectors by destroying far more American jobs in other sectors.
Dockworkers, truckers, and delivery drivers are the first Americans to lose their jobs under tariffs. Next comes job losses at American firms that import inputs, such as materials, parts, and compounds, to produce goods and services.
Advocacy group Farmers for Free Trade on Thursday, March 6 held a panel discussion with Tennessee business leaders and experts to discuss the potential impacts of trade conflict and tariffs on local businesses, farmers, distillers and construction professionals.
Nearly 60% of our imports are inputs, so tariffs will substantially raise costs for American companies. These costs will be passed along to consumers, resulting in fewer sales and, thus, job loss. For instance, steel tariffs to protect jobs in the steel industry caused massive job losses in the American automobile, motorcycle, and farming equipment sectors.
Propping up inefficient firms at the expense of efficient firms also undermines the market incentives for innovation, hard work, and cost-cutting that drive American prosperity.
Tariffs slash foreign investment in the American economy
When Americans buy fewer foreign goods, fewer US dollars are supplied to foreign markets, making the dollar appreciate against other currencies. Americans often fail to realize that when they buy a foreign product, those dollars return to the U.S. and are used to buy American goods and services, including tourism and higher education, and to fuel investment in our economy.
Opinion: Trump is wrong. He has no voter mandate for his wrecking ball policies.
But tariffs make American goods and services more expensive, hurting our exporting industries and reducing foreign investment in our country. Retaliatory tariffs, which can be expected, only serve to amplify these losses.
Tariffs cost Americans money
Tariffs are a tax paid by American consumers, and they can't be evaded by simply buying American. To meet the increased demand for American goods, American producers must expand production by bidding up the cost of resources, such as materials and labor, from other American companies.
Tariffs tend to be a regressive tax because a set tax will fall heavier on the budgets of the poor than the wealthy. And the hope that tariffs will replace the income tax is a delusion. No credible estimates come even close to raising enough revenue.
Tariffs erode America's goodwill with other countries
No matter what index of tariffs or non-tariff barriers you look at, the World Trade Organization, Heritage Foundation, or the Fraser Institute, America has some of the highest tariffs and non-tariff barriers among our major trading partners.
Combined with the fact that we are by far the world's richest large nation—having 26% of the world's GDP despite only 4% of the world's population—it is absurd to think we are being taken advantage of by trading partners.
Trump started negotiations not by lowering our tariffs to match our trading partners but by jacking them up across the board. He ripped up previous trade agreements, including one he signed and declared 'the fairest, most balanced, and beneficial trade agreement' ever. That is hardly starting off negotiating in good faith.
We tend to forget that mutually beneficial trade is between people, not governments, so even if a deal is inked, it doesn't mean that our trading partners have the money to purchase our high-end exports. Countries like India, China, and Vietnam—with per capita GDPs of only $2,500, $12,500, and $4,300 (compared to nearly $83,000 for the US)—won't be buying our automobiles anytime soon. With foreigners boycotting American goods worldwide, it is also unclear whether trade deals will convince foreigners to buy American again, an effect that could last years.
Here's how Trump's tariffs impact Tennessee directly
Tennessee's economy, heavily tied to manufacturing and exports, suffers from these ripple effects.
The state exported nearly $40 billion in goods in 2024, including $4.25 billion in medical instruments, $2.63 billion in automobiles, and $2.26 billion in computers. And roughly 1/5th of Tennessee's jobs are driven by international trade.
But Trump's 2025 'Liberation Day' tariffs can be expected to slash exports, raise input costs, and reduce competitiveness for firms like Nissan in Smyrna, Jack Daniels in Lynchburg, or Bridgestone in La Vergne. A recent Goldman Sachs report estimated that a 10% tariff alone could destroy five U.S. jobs for every job created, even without retaliation.
The support for tariffs is driven by a misunderstanding that the U.S. no longer manufactures anything. This is nonsense. The U.S. is manufacturing more than it ever has in inflation-adjusted terms. We are the second-largest exporter of manufactured goods in the world and the largest exporter of services.
We are losing jobs in manufacturing, but this is driven primarily by automation, not international trade. Automation is allowing people worldwide to move out of mundane, low-skilled jobs. This affords people the occupational choice to pursue meaningful work and leads to the wide variety of goods and services we enjoy.
And service jobs produce our most valuable resource: time. As Americans get wealthy enough, we use some of that increased purchasing power to free up more time for family and fun.
Tennesseans deserve policies that enhance, not erode, their economic edge. Trump's tariffs threaten higher consumer prices, fewer jobs, and a weaker future. We should reject the 'ripped off' myth and embrace the open trade that powers Tennessee's prosperity.
This is a photo of Daniel Smith, Director of the Political Economy Research Institute and Professor of Economics at Middle Tennessee State University.
Daniel J. Smith is the Director of the Political Economy Research Institute and Professor of Economics at Middle Tennessee State University.
This article originally appeared on Nashville Tennessean: There is no economic justification for Trump's tariffs | Opinion