The Biden administration's recent decision to keep—and possibly expand—Trump-era tariffs has Wall Street analysts and economic historians alike doing double-takes. Adding new tariffs targeting Chinese EVs and other industries creates one of those rare Washington moments: actual bipartisan agreement in our hyper-divided political landscape.
But hang on a minute. What exactly are we trying to accomplish here? And at what real cost?
Listen to the political speeches and you'd think we're engaged in some masterful strategic trade chess match, protecting American workers from unfair foreign competition. The reality? Well, it's messier. Much messier.
The Economic Self-Harm Club
Let's cut through the noise about what tariffs actually do: they're taxes. Taxes paid not by foreign governments but by American companies and, ultimately, by you and me at the cash register. That 25% tariff on Chinese goods? Beijing isn't writing checks to our Treasury. We are.
I've tracked trade policy for years, and the math never changes. Moody's Analytics found that Trump-era tariffs cost typical American households around $1,300 annually. The new proposed tariffs? They'll push that number higher. Meanwhile, manufacturing jobs—supposedly what we're protecting—haven't exactly come roaring back.
Take aluminum tariffs (please!). After implementation, domestic aluminum prices jumped, companies using aluminum as an input struggled with higher costs, and U.S. smelting capacity barely budged. The aluminum industry gained maybe 1,000 jobs while downstream industries lost tens of thousands.
This isn't winning. It's not even competing effectively.
Politics Over Economics (As Usual)
So why do smart people keep pushing policies with such dubious economic outcomes? The answer lies in a political dynamic as old as democracy itself—concentrated benefits versus diffuse costs.
When tariffs "save" a steel mill, everyone notices. The workers keep paychecks coming. The company maintains its profit margins. Politicians get photo ops at the factory gate they heroically "rescued." It's a perfect political story.
The costs? They're spread invisibly across millions of consumers paying a bit more for countless products. Nobody connects their slightly more expensive washing machine or car to trade policy. Nobody organizes marches against a 3% price increase on household goods.
(Having covered manufacturing regions in the Midwest, I've seen firsthand how emotional these issues become—rational economic analysis rarely stands a chance against the powerful symbolism of "standing up to China.")
"National Security" – The Magic Words
Both administrations have increasingly leaned on the national security justification for trade restrictions. Look, there are legitimate concerns about critical supply chains, especially in sectors like advanced semiconductors and specialized materials.
But washing machines? Solar panels? Steel? C'mon. This stretches "national security" beyond recognition.
The more honest approach would be admitting these are industrial policy choices that create specific domestic winners and losers... rather than pretending everything from socks to soybeans is suddenly vital to national defense.
The Deglobalization Fantasy
Perhaps most troubling is how these tariffs fit into a broader pattern of global economic fragmentation. After decades of deepening international trade connections, we're witnessing what some economists have dubbed the "great rewiring"—a shift toward friend-shoring, reshoring, and regional trade blocs.
Some recalibration makes sense. The pandemic exposed real vulnerabilities in our just-in-time global supply chains, no question.
But full-scale deglobalization? That would be an historic mistake. The World Trade Organization—not typically known for dramatic proclamations—estimates a fragmented global economy could slash global GDP by 5% long-term. That's not a rounding error; it's economic self-harm on a massive scale.
Better Alternatives (That Nobody Wants to Talk About)
If strengthening American competitiveness is really the goal—and shouldn't it be?—there are far more effective approaches than slapping tariffs on imports:
- Targeted innovation investment – America's advantage has always been creativity and invention, not competing on labor costs
- Education and workforce development – Preparing workers for the high-skill manufacturing jobs that actually command premium wages
- Infrastructure modernization – Reducing production costs through better logistics and energy systems
- Multilateral pressure on unfair practices – Working with allies (remember those?) to address legitimate grievances
These approaches would strengthen America's economic position without the self-sabotage aspect of broad tariffs.
The current tariff obsession represents a bipartisan failure of economic leadership. And honestly? It's getting old. I've watched three administrations now pursue variations of the same flawed strategy, expecting different results.
As we head deeper into election season, we should demand better from those seeking to lead the world's largest economy—policies grounded in economic reality rather than political convenience.
Until then... well, keep checking your receipts. Those tariffs aren't paying themselves.
