All the talk about tariffs so far this year — and especially with the developments this week — has created massive uncertainty. All of a sudden, complex supply chains that have taken decades and billions of dollars to develop face possible destruction. Business investment has slowed to a crawl. No wonder financial markets have been panicking. (RELATED: The Tariff Reckoning: America’s Economic Resolve in Trump’s Second Act)
The uncertainty has been exacerbated by President Trump’s on-again, off-again rhetoric. That is confusing to observers, but perhaps not as confusing as tariffs seem to be to the president, his team, and proponents of tariffs. (RELATED: Tariffs, a Solution in Search of a Problem)
A primary confusion is due to mixed signals regarding the precise goals of the tariffs. Here, we need to make a distinction between proposals for tariffs and actual tariffs. Several times over the past couple of months, President Trump stated that his goal in threatening to impose tariffs on goods imported from abroad was to persuade foreign governments to reduce their own tariffs and other trade barriers blocking or impeding American exports to those countries. Indeed, a mutual reduction of trade barriers would have been economically beneficial to both sides. (RELATED: Trumpian Geoeconomics)
Now, however, with little success in getting other countries to reduce their trade barriers, Trump seems committed to imposing high tariff rates on a vast range of imports. So, what is his goal now? Is it to curtail imports to protect American businesses from foreign competition? Or is it to raise significant revenue for Uncle Sam? These two goals work against each other. To the extent that tariff rates are high enough to keep goods from entering the country, tariff revenues from those no longer imported goods will be zero. (RELATED: Tariffs: The Hammer America Keeps Using)
The confusion from President Trump about tariffs runs even deeper. Last week the president said, “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth.” It is one thing to object to foreign countries blocking the importation of American goods, but quite another to accuse foreign businesses that supply goods that Americans want of “taking our wealth.”
Did any of those supposedly thieving foreigners put a gun to the head of American consumers and force them to buy their goods? Of course not. Americans freely paid for those goods because, in accordance with the basic economic law of voluntary exchange, both sides benefit from the exchange (positive sum), or the exchange wouldn’t have taken place. (RELATED: Tariffs: The Sword of Sovereignty)
To this, you might reply, “Maybe so, Hendrickson, but the larger point is that they are ‘taking our jobs.’” Indeed, one of the main arguments made by proponents of tariffs is that American consumers should be willing to suffer some economic inconvenience (some “pain,” as the president truthfully characterized it) for the sake of the patriotic goal of saving American jobs. Let’s examine the job-saving angle.
Several weeks ago, Treasury Secretary Scott Bessent, advocating for tariffs, declared, “Access to cheap goods is not the essence of the American dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security.” This comment is manipulative and condescending.
In the first place, it is a straw man. Nobody asserts that the “essence” — the primary focus — of the American dream is access to cheap stuff. That is a tawdry assertion. The true crux of the American Dream is individual liberty; that is, the right to pursue one’s sense of success and well-being, in whichever way one chooses, as long as the rights of others are not infringed.
One basic liberty is the freedom to buy the goods and services of one’s choice from the vendor of one’s choice — a decision that, for any cost-conscious individual (i.e., most of us), involves obtaining the most value possible (that is, the most benefit for the lowest cost) for each dollar spent. Tariffs diminish this freedom of choice. It is worse than ironic that President Trump has labeled the day his tariffs will start as “Liberation Day;” that is positively Orwellian.
In the second place, Sec. Bessent apparently thinks it is virtuous for Americans of modest means to suck it up and feel proud to pay the higher prices that tariffs will impose in the name of preserving or adding American jobs. But higher consumer prices don’t guarantee more jobs. If consumers face higher prices due to tariffs, that means that they will be able to afford fewer purchases. Overall, consumer demand is impaired. Less consumption equals less demand for goods equals less demand for the labor that produces goods. (RELATED: Taxes by Another Name)
The higher prices that tariffs will produce are inconsequential to wealthy people like Sec. Bessent, but to the tens of millions of Americans who are just getting by, higher prices will put downward pressure on their standard of living. Indeed, as research done by economists at the Peterson Institute for International Economics shows, new tariffs involve “a massive shifting of the tax burden from rich taxpayers toward lower-income Americans,” with the losses being “greatest for those at the bottom of the income distribution.”
So much for President Trump’s claim that he wants to deploy tariffs to reverse the rise of inequality in the United States. (More confusion!) Prediction: Higher prices will be no more popular under President Donald Trump than they were (albeit for different reasons) under President Joe Biden, and they will come back to haunt Republicans in the 2026 mid-term elections.
But do tariffs save jobs? Yes. And no. Advocates for tariffs can point to the tariffs that President Trump placed on foreign steel during his first term and truthfully claim that jobs were saved in domestic steel manufacturing. The whole truth, though, is that many more jobs — American jobs — were lost in domestic manufacturing companies that used steel as an input.
The economic reality is that tariffs do not reduce unemployment, but rather, they redistribute it, and frequently increase unemployment on an overall basis. (RELATED: Presidents Are Not Economic Magicians)
Incidentally, multiple studies spanning the last seven decades have calculated that the annual cost of U.S. jobs saved by tariffs ranges from $600,000 each to over $900,000. Doesn’t that sound like the kind of wasteful government policies that DOGE was created to eliminate?
One other argument invoked in favor of tariffs is that they will restore America’s industrial base. This is a backward-looking perspective. At best, this is a nostalgic desire to recover a golden past.
In reality, patterns of production and employment have been evolving constantly and rapidly over the past two-plus centuries. Employment on farms and employment in factories both have been falling long-term. Those trends involve much individual pain and much social progress as new technologies enhance productivity and force shifts in labor patterns. We end up producing more with less, and we are wealthier as a result.
To imagine that the government can recreate a golden past is the socialist conceit that the political powers have supernatural knowledge and abilities to create a better society through a central plan in which those in power pick the winners and losers. What that translates to in America today is a mad scramble of special interests. Those with the best political connections will profit at the expense of the rest of us.
The best way for the federal government to “protect” American industry is to not cripple American businesses with harmful policies so as to maximize their competitiveness. That means, let’s have more of the economically wise policies of the first Trump administration, namely, lower taxes and less regulation.
As for tariffs, if President Trump can succeed in knocking down foreign barriers to American exports by threatening to impose tariffs, more power to him. But if our trading partners refuse to lower their trade barriers and Trump insists on increasing domestic tariffs, he will be inflicting more economic pain on Americans. He and the Republican Party will not find the American people grateful for such a costly error.
READ MORE from Mark Hendrickson:
![Trump's Admin Guts Another ‘Rogue Government Agency with Zero Accountability’ [WATCH]](https://www.right2024.com/wp-content/uploads/2025/03/Trumps-Admin-Guts-Another-‘Rogue-Government-Agency-with-Zero-Accountability-350x250.jpg)
![‘We All Owe Him (Elon) a Huge Debt of Gratitude’ [WATCH]](https://www.right2024.com/wp-content/uploads/2025/03/‘We-All-Owe-Him-Elon-a-Huge-Debt-of-Gratitude-350x250.jpg)
