High prices on domestic products hurt consumers.
Economic nationalism is back in fashion. In Washington, the slogan “Buy American” is the flavor of the day, promising mandatory US purchases, domestic production, and protection of “American jobs.” This policy is central not only to Donald Trump’s rhetoric but also to that of the previous Joe Biden administration.
It sounds good at first. No one opposes more jobs for Americans, stronger industry, and the idea of strategic independence from certain global supply chains. But all these slogans conceal the fact that the “Buy American” ethos is not punishing corporations—it’s ordinary American consumers and small businesses that end up paying the price.
“No one wants ‘Made in USA’ anymore,” Pepper Harward, the chief executive of Oka Brands footwear, told Axios. Oka partners with several massive brands, including New Balance and Walmart, and overseas, there’s been a backlash. When you inflame nationalism at home, it has a way of inflaming it abroad as well. The end result is American businesses making fewer international sales, waiting on American consumers to fill the void left by customers in Canada, South Korea, and Japan.
Mandatory US sourcing and production lead to more expensive, less efficient, and technologically backward alternatives in most industries. Most research shows that each “domestic” job created or kept in the country costs taxpayers more than the value of the job itself. There is a reason the work went overseas in the first place.
The Cato Institute cites that in some sectors, “Buy American” rules can raise the cost of a job to more than $250,000, leaving consumers with higher prices, fewer choices, and a less dynamic economy. But “a dynamic economy” is a tough sell politically compared to “job creation.”
Hungary, for example, has pushed the reshoring of manufacturing and in recent years created “national champions” in the tech and agricultural sectors. The result? Inflated prices, monopolies, companies controlled by political appointees, and increasingly dissatisfied consumers. Hungarian Prime Minister Viktor Orban eventually pursued price controls to tamp down on the policy errors his administration championed.
Other cautionary tales come from France and Italy, which both followed similar paths with equally troubling results. France’s nationalism-tinged state intervention in companies like Renault included blocking its merger with Nissan. In the end, it led to a setback in competitiveness and increased political interference in corporate decision-making. Blasting patriotic rhetoric, France promoted campaigns like “Manger Français” (Eat French), but still saw a similar outcome. It has driven up food prices and limited what consumers can buy. Italy was not different. The government’s protection of the “Made in Italy” label in the fashion and textile industries has distorted markets, squeezed out small businesses, and increased prices.
Together with the state bailouts of national airline Alitalia, this illustrates pretty plainly how economic nationalism often sacrifices efficiency for political expediency. Voters sour quickly on it when the promised utopia is revealed to be expensive.
All the restrictions, tariffs, and mandatory domestic reshoring ultimately get reflected on price tags. Everything you buy, from appliances to clothing, exists in a global marketplace.
As always, the poorest pay the price for these policies. “Made In America” makes no difference to the wealthy and well-off. Higher prices for these individuals amount to a rounding error in monthly budgets, but most Americans say they live paycheck to paycheck.
There’s a reason discount grocers like Aldi, Lidl, and Dollar General are exploding across the US.
Many still argue that “Buy American” will strengthen supply chains and make America more independent, but nothing makes Americans more vulnerable than consumer debt and resorting to credit cards each month to pay for groceries and medicine.
Economic nationalism is populism in a cheaply produced patriotic costume. It’s politically popular, but flimsy, and struggles with a short shelf life. History has repeatedly proven that protectionism punishes consumers first, politicians last, and it’s true whether you’re in Europe, Latin America, or the United States.
America can avoid this trap, but politicians aren’t typically keen on telling voters to be more grateful for what they have. Promising more, even when it’s been shown to carry steep costs, is the only thing that gets anyone elected.
