They won’t end the income tax, bring back jobs, or stop China. They will make you poorer.
President Trump has established a baseline 10% tariff on nearly all imports. Additionally, the White House announced plans for reciprocal tariffs on 57 countries. A week later, on April 9, the administration then paused these measures for 90 days.
We still don’t know whether the reciprocal tariffs will take effect after July 9. What is certain is that, in addition to the 10% baseline, there is a 25% tariff targeting car imports and most goods from Canada and Mexico, and a staggering 125% levy is in place on most Chinese imports.
Some of my conservative friends like to imply that tariffs are part of a clever strategy to eliminate the federal income tax. They point out that until 1913 America had no such tax and the federal government was largely funded by tariffs.
Now, I’m all in favor of eliminating income taxes; I spent much of the last legislative session in Mississippi advocating for the repeal of our state income tax. But the numbers don’t add up for tariffs to replace the federal income tax entirely. To raise the $2.6 trillion annually that the income tax provides, tariffs would need to average 127% on all imports (even accounting for an estimated 20% drop in import volume). Do that, and only the wealthy will be able to shop at Walmart.
Others argue that tariffs are necessary to protect American industry against offshoring and job losses. Really?
Today, US output is close to three times higher than it was when Lyndon B. Johnson was President. American factories make almost double what they did when Ronald Reagan left the White House. The growth in industrial output happened even as tariffs declined from 6–8% in 1969 to about 2% by 2010 (with a slight increase by 2020 due to higher tariffs on China).
Yes, manufacturing employment in America has fallen, even as output has grown. But that is because fewer workers are needed to make more. The same trend played out in agriculture a century before. Fewer farm jobs did not make Americans poorer—it freed them to pursue better-paying jobs.
That’s why total employment in America has continued to rise even as manufacturing’s share of the workforce has fallen. There were 70 million jobs in 1969, and there are 160 million jobs today. So much for free trade “taking away” our jobs.
“But what about China?” some ask.
America should be worried about China. It’s alarming that China’s Jiangnan Shipyard builds more ships in a single year than all US shipyards combined. It’s concerning that China produces more drones in a day than the US does in a year.
But if China is the threat, why hit countries like Vietnam, South Korea, and India—potential competitors to China—with crippling tariffs?
Tariffs won’t abolish the federal income tax, reverse a supposed industrial decline, or solve the question of how to deal with an aggressive China. What they will do is make you poorer and America less competitive.
Consider your cell phone. Apple has already stated that tariffs will increase its costs by nearly $1 billion this quarter alone. That extra cost? It’s coming out of your pocket when you upgrade your iPhone. To dodge new tariffs on Chinese goods, Apple is shifting much of its manufacturing from China to India. Don’t expect new iPhone factories in Mississippi or Michigan—think Madras instead.
Ironically, the high-value work on smartphone production—the design, software, and chips—is already done in the US. Tariffs will simply move low-value assembly from one Asian nation to another, leaving you to foot the bill.
My big fear is that tariffs won’t just be seen as having triggered an economic downturn; they’ll also overshadow all other conservative wins.
During my recent trip to Washington, several administration insiders suggested that the current tariff strategy is part of a broader plan. They claim it’s intended to gain leverage to eliminate restrictions on US exports. Whether or not this was the original intent, I hope it becomes the retrospective rationale. For instance, if a close ally like the UK, which runs a trade deficit with the US, agreed to eliminate all its tariffs and allow any product sold in America to be sold in the UK, that would justify a reciprocal response and could set a precedent. Other allies—Japan, India, Australia—might follow suit, resulting in the complete removal of trade barriers between the US and its allies.
That’s the optimistic scenario. The alternative is higher costs for everyone, leaving us all poorer.
