Trump’s Terrible Tariffs

Trump’s tariffs not only hurt American consumers but also do long-term damage to American national security interests.

Tomorrow, President Trump will impose yet another round of new tariffs, meaning almost every country in the world now faces higher American tariffs than they have in decades. This change in U.S. foreign economic policy is massive—massively bad. U.S. tariffs will be higher than at any time since 1934—18.3 percent on average compared to just 2.5 percent when Trump took office earlier this year. Nothing good will come from this radical policy change. Many negative consequences will follow, first for American consumers, but also to America’s standing in the world as the leader of the free world.

The immediate negative repercussions for American consumers and the U.S. economy have rightly received much attention. Tariffs are taxes. Contrary to the imagery that Trump tries to conjure, money does not “flow in” from tariffs from other countries. American consumers pay these tariffs to the U.S. government. Of course, individual companies must determine what percentage of these new, higher costs on their products they pass on to consumers. But the burden of tariffs falls squarely on consumers. And the consumers who are hit the hardest are low-income workers. Billionaires don’t do much shopping at Target. Trump’s tariffs will also damage small businesses that rely on imports to manufacture their products or build houses, schools, or factories. Trump’s tariffs are hurting some of the very companies he claims to be helping. And Trump’s hypothesis that tariffs will bring back industries that were abandoned or put “miners back to work” is one that most economists see little evidence for. (See, for instance, recent articles by David Autor and Gordon Hanson in the New York Times or Harold James and Marie-Louise James in Foreign Affairs)

The longer-term damage to American national interests—the secondary and tertiary negative consequences of Trump’s erratic and irrational tariff polices—has received less attention but may be more damaging.

First, American democracy has suffered another setback under Trump because of the way that these tariffs were imposed. Article I, Section 8, Clause 1 of the U.S. Constitution explicitly states that "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States." Yet, the U.S. Congress played absolutely no role in the formulation of these sweeping tariffs. There were no hearings. There was no debate. Republicans in the House of Representatives and the Senate freely abdicated their constitutionally mandated power to Trump. In doing so, they have weakened the checks and balances in our system of government that have proven to be so resilient over the centuries. In doing so, they have also damaged America’s reputation as the democratic leader of the free world. There was a time, not long ago, when small-d democrats admired American democracy and found inspiration from our system of government. That era is ending right now. Losing that reputation will hurt America’s ability to pursue economic and security interests.

Second, Trump’s tariffs have damaged relations with our democratic allies. In his initial charts showing the tariffs on goods from countries, there was no distinction between autocrats and democrats, nor was there differentiated treatment between allies and enemies. Trump imposed high tariffs on some America’s closest allies but did not impose significant new tariffs on our autocratic adversary, Russia. Trump claimed that he was imposing tariffs to stimulate manufacturing in the United States. But he undermined the credibility of this claim by blatantly punishing some countries more than others for obvious political motivations. His massive tariff rate for Brazil was the most obvious example. As Trump himself explained, he imposed this tariff rate to punish the current democratically elected president, Lula da Silva, for the way his government treated the former president, Jair Bolsonaro, who tried to inspire a disruption of the peaceful transition of power in Brazil, similar to what Trump attempted to do on January 6, 2021.

Many of our democratic allies decided to acquiesce to Trump’s new tariffs. But they do not like Trump’s coercive ways. They will not forget how they were treated. When we need them in the future to advance our security interests, such as during a crisis over Taiwan, they will not be as ready to support us.

Third and finally, Trump de facto withdrew the United States from leading the liberal international economic order this week. In the longer run, this move may be the most damaging to American national interests.

Since the end of World War II, the United States has anchored a global economic system of market economies that traded with each other and invested in each other in mostly mutually beneficial ways. The United States invented multilateral institutions such as the World Bank, the International Monetary Fund, and the General Agreement on Trade and Tariffs (GATT), which later morphed into the World Trade Organization (WTO) to help support global capitalism. During the Cold War, this system worked better than the communist global economy created and imposed by the Soviet Union on the communist bloc. The free world became much richer than the communist world—a big reason why we won the Cold War.

After the Soviet Union collapsed and the Cold War ended in 1991, American leaders expanded this global market system to include first China and then Russia. That may have been a mistake—or more specifically, a decision made too hastily without developing mechanisms to enforce the rules of the game on Communist China. (For more details, see the three chapters on global order in Autocrats versus Democrats: China, Russia, America, and the New Global Disorder). But the strategic policy response should have been to reform this global economic order, not withdraw from it. Trump is exiting this global economic system, but China is not. In doing so, we are creating the permissive conditions for allowing our most significant competitor in the 21^st century to play a leadership role in the very international economic system that we created at the end of World War II. That makes no sense. Trump may want to go at it alone. But China does not. And many other countries may prefer some semblance of a global economic order, even if anchored by China, rather than a return to the jungle, where every country seeks to maximize its economic interests at the expense of everyone else. Moreover, China has also been busy creating many new economic clubs – BRICS, the Shanghai Cooperation Organization, the Belt and Road Initiative (BRI), etc. – in which the United States is not a member, but Trump and his administration are offering no alternative new organizations to unite the democratic world. While we withdraw from multilateral economic institutions supporting trade and investment, China is expanding them.

We should know the dangers of returning to economic disorder. The last time U.S. tariffs were this high was 1934—an era of global depression, the rise of fascism, and the advent of World War II. We don’t want to risk repeating that history.