The Truth About Tariffs

 The notion that Trump’s tariffs on Canada, Mexico, and China will revive U.S. manufacturing is a frequently cited claim within his administration, yet it fails to account for the complexities of global supply chains and economic interdependencies.

Tariffs increase costs for U.S. manufacturers. Rather than incentivizing companies to move production to the U.S., tariffs raise the cost of imported raw materials like steel and aluminum. Many U.S. manufacturers rely on these inputs to produce goods domestically. Higher costs can lead to lower competitiveness for U.S. businesses, making it harder for them to expand or invest in American manufacturing.

For example, when Trump imposed steel and aluminum tariffs during his first term, U.S. manufacturers that depended on these materials faced rising costs, making them less competitive in global markets. Some even had to cut jobs or shut down operations. (AP News)

Companies prefer low-cost labor and automation. One of the main reasons manufacturing has moved overseas is cheaper labor costs. Even with tariffs, companies are unlikely to move production back to the U.S. because labor remains significantly more expensive in the United States than in countries like China and Mexico.

Instead of reshoring jobs, many companies will automate their production to offset higher costs. This means even if some factories return to the U.S., they may not bring back the high number of jobs that people expect.

Supply chains are too complex to easily move. Modern manufacturing is heavily dependent on global supply chains, where different components are sourced from multiple countries. Moving entire supply chains back to the U.S. would require massive investments in infrastructure, workforce training, and supply networks, which won’t happen overnight—if at all.

For instance, companies like Apple rely on an intricate web of suppliers across Asia, and simply imposing tariffs does not provide an alternative that can match the efficiency of these existing systems.

Tariffs encourage companies to move elsewhere and not to the United States. Instead of bringing manufacturing back to the U.S., many companies affected by tariffs on China have simply shifted production to other low-cost countries like Vietnam, India, or Mexico. This was evident when Trump imposed tariffs on China in 2018–2019, and companies relocated rather than returning to the United States. (Brookings)

Retaliatory tariffs hurt U.S. exports. When the U.S. imposes tariffs, other countries retaliate with their own tariffs on American goods, making it harder for U.S. manufacturers to export their products. If American businesses face difficulty selling goods abroad due to higher tariffs, they may reduce production rather than expand it.

For example, In April 2018, China retaliated against U.S. tariffs by imposing duties on American agricultural products, causing significant losses for U.S. farmers and related industries. (Congress.gov)

Tariffs alone won’t bring jobs back. While tariffs might pressure some companies to reconsider their supply chains, they are not an effective solution for reshoring large-scale manufacturing to the United States. Instead, they increase costs, disrupt trade, and often push companies to seek alternative low-cost countries rather than returning production stateside.

And what of the myth that the economic hardships Americans would feel would be temporary? 

The belief that the economic hardships caused by tariffs are only temporary is misleading. In reality, the negative effects of tariffs—higher prices, job losses, and supply chain disruptions—can persist for years and even reshape industries in ways that permanently harm American workers and businesses. Here's why:

Higher prices are long-term, not temporary. Tariffs are essentially a tax on imports, and companies often pass those costs on to consumers. While some argue that businesses will quickly adjust by finding new suppliers or moving production to the U.S., these transitions are expensive and slow.

The cost of steel and aluminum surged after Trump imposed tariffs in 2018, and U.S. manufacturers paid higher prices than their foreign competitors even years later.

The 2025 tariffs on Canada, Mexico, and China are expected to cost the average American household more than $1,200 annually (PIIE).

Because tariffs do not disappear overnight, American consumers and businesses will continue to feel these effects indefinitely. Even if a future administration lifts the tariffs, supply chains and pricing structures will take time to readjust—if they ever fully do.

Jobs lost to tariffs may not come back. Tariffs are often framed as a way to "protect American jobs," but they can just as easily eliminate jobs by making it harder for companies to afford raw materials or compete in global markets.

After Trump’s 2018 steel tariffs, thousands of manufacturing jobs were lost because U.S. companies struggled with higher steel prices. Even when some steel jobs were added, the net effect was job losses in other sectors that relied on steel.

When China retaliated against U.S. tariffs by cutting purchases of American agricultural products, many farmers were forced to shut down permanently, even after some were given federal bailout money.

Once jobs disappear due to tariffs, they don’t automatically return even if the tariffs are later lifted. Companies may shift production permanently, or businesses may collapse before relief arrives.

Supply chains are permanently disrupted. Supply chains are not easily rebuilt after tariffs force businesses to adjust. Companies spend years establishing trusted suppliers, logistics networks, and pricing agreements.

If tariffs make it too expensive to import materials from one country, companies don’t necessarily shift to American suppliers—they move to other foreign suppliers in places like Vietnam, India, or Mexico.

Once these supply chain shifts happen, they are often permanent because businesses don’t want to keep changing sources every few years.

Even if tariffs are removed, many companies won’t return to their original suppliers or pricing structures, keeping costs high for American businesses and consumers in the long run.

Retaliatory tariffs can have lasting damage. When the U.S. imposes tariffs, other countries retaliate. Even if the U.S. later lifts its tariffs, other nations may not immediately reverse their countermeasures, leaving American exporters at a permanent disadvantage.

After Trump's tariffs on China, China imposed tariffs on U.S. soybeans, hurting American farmers. Even after some trade agreements were reached, China had already developed alternative suppliers from countries like Brazil, reducing reliance on U.S. agriculture.

If Canada and Mexico retaliate against U.S. tariffs, their industries may forge stronger trade relationships with other countries, permanently reducing demand for American goods.

These global trade shifts don’t automatically reverse, meaning American businesses could face disadvantages for years or decades.

Inflationary effects can linger. Tariffs contribute to inflation by raising costs on imports. Once prices rise, they rarely return to pre-tariff levels even if tariffs are eventually lifted. Businesses that have adjusted pricing structures signed new supplier contracts, or absorbed higher costs will be reluctant to lower prices in the future.

For example, when Trump imposed tariffs on washing machines in 2018, prices rose by about 12% and never fully returned to pre-tariff levels, even after adjustments were made.

As new tariffs in 2025 affect industries like automobiles, food, and electronics, those price increases will likely become the new normal, especially as companies factor in uncertainty about future trade policies.

The hardships are not temporary. The idea that the economic pain caused by tariffs will pass quickly is wrong. That notion doesn't take into account supply chain rigidity, permanent job losses, long-term price increases, and global trade shifts. Even if tariffs are later removed, their effects can last for years or even permanently.

A more effective approach to strengthening U.S. industries and bringing manufacturing back would involve investment in domestic manufacturing, strategic investments in technology, infrastructure, workforce development and training rather than relying on punitive tariffs that disrupt economies and create lasting damage.