First, Trump’s tariffs will reduce US producers’ competitiveness. Tariffs are often discussed as a tax on consumption, which, of course, they are. Less noted is that they are also a tax on business investment. A little over half of US imports are industrial supplies and materials, capital goods and automotive parts. By making these inputs more expensive, tariffs will make it harder for American manufacturers to maintain low prices and expand output and hiring.
On “Liberation Day”, US President Donald Trump declared that sky-high tariffs would cause jobs to “come roaring back into our country”. Not long after, Commerce Secretary Howard Lutnick expanded on this point in a television interview: “The army of millions and millions of human beings screwing in little screws to make iPhones — that kind of thing is going to come to America.
Well. For my part, I don’t see the need to drive up manufacturing employment in America. However, even if I shared the Trump administration’s goal, I would still be very concerned about the trade war because the tariffs will not succeed in reviving factory jobs for (at least) five reasons.
