As part of his “Make America Great Again” election campaign, Donald Trump is calling for the imposition of 60% tariffs on goods made in China and a 20% tariff on imports from other nations.
His rationale seems simple: tariffs will boost American jobs, reduce the federal deficit, cut food prices and even generate revenues to subsidize childcare. But the former president’s supposed all-purpose trade fix is fundamentally flawed.
One of the central promises behind Trump’s proposed tariffs is that they will bring back factory jobs to the US by making foreign goods more expensive and, therefore, incentivizing companies to manufacture domestically.
In theory, this sounds appealing, but the reality is far more complex. Indeed, history shows that tariffs rarely lead to long-term job creation in industrial sectors.
In fact, after Trump imposed steel tariffs in 2018, many US companies that relied on imported steel materials were forced to raise prices or cut jobs because the costs of raw materials skyrocketed.
The tariffs led to short-term disruptions, but they didn’t result in a lasting boost in manufacturing employment.
Instead, companies often either automate jobs to save costs or relocate to other low-wage countries that aren’t subject to the same tariff rules.
Fast forward to the present, and Trump’s proposed 60% tariffs on Chinese-made goods will not stop American companies from seeking cheaper alternatives abroad.
Global supply chains are more agile than ever, and many US businesses would simply shift their sourcing to countries like Vietnam, India or Mexico to avoid paying the new 60% tariffs.
While Trump may view China as the main adversary in his trade war, Chinese manufacturers can sidestep tariffs by partnering with factories in other nations, labeling their products as “Made in Vietnam” or “Made in Mexico.”
Tariffs on China will thus not bring back jobs to the US but will likely just redirect them elsewhere.
Another major flaw in Trump’s tariff plan is the false hope that tariffs will lower US food prices. Fundamentally, tariffs are a tax on imports and the burden of those taxes almost always falls back on consumers.
When tariffs are imposed on goods that Americans regularly consume—such as electronics, clothing, or food ingredients—the prices of these goods will rise.
For instance, if agricultural equipment, fertilizers, and packaging materials are subject to tariffs, the cost of producing food will inevitably grow.
American farmers, confronted with higher input costs, will likely pass those expenses on to distributors and grocers, further driving up the price of food.
Ironically, this will have the opposite effect of Trump’s claim: rather than lowering food prices, tariffs can be expected to contribute to even more food inflation – an especially hot-button political issue on the campaign trail.
Moreover, tariffs on a wide range of imports, especially from China, will affect countless industries—from technology and automotive to construction and consumer goods.
American companies, many of which rely on imported parts, will face increased costs, making US goods more expensive domestically and less competitive internationally.
This could force companies to raise prices, reduce investment and even cut jobs. In the end, American consumers will bear the brunt of the higher costs of Trump’s proposed tariffs.
More broadly, Trump’s tariff plan risks destabilizing global trade networks. If tariffs lead to higher prices and slower economic growth in the US, consumers will spend less, companies will invest less and overall economic activity will contract.
In addition, the retaliatory tariffs that are sure to follow from countries affected by Trump’s tariffs could further slow global growth and lead to a damaging, wide-reaching trade war.
On a diplomatic level, Trump’s tariffs would exacerbate tensions with key allies and trading partners. Countries affected by the tariffs, not just China but also allies like Canada, Mexico, Japan and EU nations, are likely to respond by imposing their own new duties on American goods.
This would hurt US exporters, particularly in industries like agriculture, manufacturing and technology.
Trade wars are a zero-sum game and no country truly wins by distorting free trade. Instead, history shows they lead to prolonged economic pain and diplomatic strife.
A breakdown in trade relations between the US and its key trading partners could also undermine America’s international standing. Countries targeted by US tariffs may turn toward other global powers, not least China, to form new alliances, weakening America’s global influence and power.
A US-led shift away from multilateral trade agreements in favor of high-wall protectionism would ultimately lead to a more fragmented and less prosperous global economy – and ultimately not have the negative impact on China Trump’s tariffs are designed to exact.