Since his inauguration in January, President Donald Trump has imposed sweeping tariffs on a range of imports: 25% tariffs on all aluminum and steel imports effective March 12, followed by tariffs on finished cars and car parts effective April 3 and May 3, respectively.
On April 2, Trump announced a 10% baseline tariff on imports for all U.S. trading partners effective April 5 and reciprocal tariffs targeting 60 of what he called the “worst offenders” effective April 9.
Trump said these tariffs are a declaration of economic independence and an end to a global trade market that has allowed countries to “rip off” the United States.
Despite these goals, the real, negative impacts are already apparent in the U.S. economy.
As of April 4, the U.S. stock market has lost nearly $5 trillion in value since February, the Dow Jones Industrial Average futures lost 2.5% and S&P 500 futures dropped 3.6%. Shares of Tesla and Palantir are down 8% and Apple shares fell by 7%.
The Campanile thinks this radical shift in U.S. trade policy — upending nearly half a century of gradual globalization — is unlikely to curb offshoring, the practice of basing manufacturing overseas to take advantage of lower costs, and will ultimately harm low- to middle-income Americans.
The premise behind the tariffs — that the United States has been systematically disadvantaged by unfair trade practices — misrepresents the complexity of global trade.
Despite what was presented on April 2, the tariffs that were said to be imposed on the United States were actually based on the trade deficit of physical goods with each country.
This calculation is over-simplistic and misleading. For example, while the United States imports more goods from the European Union than it sends, the United States exports more services than it imports.
Taking the trade of services into account, not just goods, would cut the trade deficit between the two countries in half.
And still, many past free-trade-agreement partners now face tariffs, some upwards of 20%, like South Korea. With the removal of free trade, The Campanile thinks the president overlooks the benefits Americans receive from importing goods, such as lower prices, higher incomes and product availability.
With countries retaliating against U.S. goods with similar tariffs, there is potential for a trade war like in 2018, which cost the United States nearly 300,000 jobs and an estimated 0.3% of real GDP. Such a trade war would put the financial burden of tariffs on domestic consumers and firms.
Historically, supply shortages and importers maximizing profits have led to increased prices of imported goods.
For low- to middle-income families, these price increases may account for a significant portion of their income, worsening living conditions and ultimately hindering social mobility.
And while some domestic manufacturing may increase, leading to more jobs within the country, overall employment will likely still decrease. During the 2018 trade war, steel-consuming jobs outnumbered steel-manufacturing jobs 80-1, indicating greater losses than gains from steel tariffs.
More concerning is the long-term impact of this approach. The United States accounts for only 15% of global import demand, meaning it lacks the leverage to force widespread concessions or return manufacturing to the United States.
According to the Global Trade Alert, even if the United States halted all imports, 100 of its trading partners would recover within five years.
The rest of the world is far more prepared to live without the United States than the United States is to live without them.
Rather than boosting domestic manufacturing, President Trump’s tariffs risk isolating the United States from critical international supply chains, hurting the most vulnerable in our country.
The administration must reconsider its decision to spark a global trade war built on outdated, failed economic policies and instead focus on domestic initiatives, minimizing animosity between countries and truly benefiting the working class.