Trump’s Tariffs Are as Bad as Bidenomics

Both models of state-directed capitalism misallocate resources and make the nation poorer

By Phil Gramm and Donald J. Boudreaux. Excerpts:

"Certainly there is no evidence that the protectionism of the first Trump administration benefited U.S. industrial production, which rose in 2017 and 2018 in response to deregulation and tax cuts, then fell by 2% under protectionist policies in 2019. Economic growth, which reached a 13-year high in 2018, slumped in 2019 under Mr. Trump’s protectionist policies, and employment in manufacturing as a percentage of total employment continued to fall on a secular basis, as it had before Mr. Trump’s tariffs." 

"the closest that protectionists come to providing an example of tariff policies generating positive results is their assertion that the U.S. prospered because of high tariffs during the 19th century. But economists and historians have repeatedly shown that the U.S. industrialized faster when tariff rates fell. By the end of the 19th century, it was clear even to President William McKinley, whose famous 1890 tariff proved disastrous economically and politically, that “the period of exclusiveness is past. The expansion of our trade and commerce is the pressing problem. Commercial wars are unprofitable.”"

" We don’t have to speculate on how effective the Trump tariffs will be in creating new jobs, because we have evidence from the first Trump term. In 2018, Mr. Trump imposed tariffs on washing machines, raising the cost consumers paid for these appliances by more than $1.5 billion annually while bringing in only $82 million in customs revenue. Even after netting out the tax revenue, the average annual cost to American consumers of each job created by these tariffs was north of $815,000"

"The situation was similar with Trump’s first-term steel tariffs."

"the average annual cost to American consumers per job saved or created by tariffs from 1950 to 1990 was, in 2025 dollars, nearly $810,000."

"If Mr. Trump’s across-the-board tariffs bring back jobs in manufacturing, where will the workers come from? Forty-three percent of U.S. manufacturers in the recent National Federation of Independent Businesses questionnaire said that they couldn’t find employees to fill existing jobs."

"Only 8% of American workers are now employed in manufacturing, which is so mechanized that it produces 2.5 times the output value it did in 1975, when it accounted for 22% of the labor force. If putting high tariffs on clothing at Walmart brings back the cotton mills where our parents and grandparents toiled, who wants those jobs? Should the capital to build these mills be funded by cutting back on artificial-intelligence investment?"