The ostensible goal of “Liberation Day,” in which the Trump administration will impose steep, near-universal tariffs on imports, is to “make America the manufacturing superpower of the world once again.” The theory goes like this: tariffs will make Americans buy fewer imported goods. Domestic and foreign manufacturers will be incentivized to set up plants in the United States to avoid the tariffs, revitalizing the country’s manufacturing base and making its exports more competitive.
“When companies realize the incentives have changed, that they’re going to have to factor in tariffs for imports, and they’re not going to be able to just import cheap labor also from other countries under the president’s policies,” Mark DiPlacido, policy advisor at the pro-Trump think tank American Compass, told PBS News Hour, “these companies are going to be incentivized to invest in the education and training that our population needs to be successful.”
The evidence for all this is pretty thin, and it represents a strange brew of ideological tendencies. The Trump administration’s protectionist policies go against decades of “free trade” orthodoxy about the promise of open borders and globalization, pushed for decades in the U.S. by neoliberal policymakers on either side of the aisle. Meanwhile, the administration’s vision for what happens after those tariffs go into effect—the mechanisms by which the U.S. will actually reindustrialize—is pure neoliberal market utopia: nudged in the right direction, companies will start building the factories that will restore American greatness.
So far, this isn’t going very well. In March, the Institute for Supply Management’s Purchasing Management Index—a monthly survey of corporate leaders indicating manufacturing performance—dropped 1.3 percentage points below February levels to 49 percent, indicating that manufacturing activity is contracting rather than growing. Like the oil and gas executives now furious with Trump, those in the chemical products, electronics, metals and machinery business (to name a few) expressed worries about the uncertainty being bred by Trump’s approach to tariffs. Survey respondents reported that already-implemented tariffs are eating into profits, and that customers are “pulling in orders due to anxiety about continued tariffs and pricing pressures.”
At a basic level, tariffs make stuff more expensive. Companies have spent decades structuring production around the expectation that goods can flow relatively freely across certain borders. Long-term corporate planning has factored in other countries as reliable places to make and sell products, and to source parts and machinery. GM assembles about 30 percent of the cars it sells in the U.S. in Canada or Mexico, but roughly 40 percent of the parts used to make all cars assembled in the United States are made in other countries. Some can cross borders multiple times before landing on the sales lot as part of a finished vehicle. Tariffs might signal that they should make more stuff in the U.S., but that can’t happen overnight. Transforming supply chains and re-allocating production is costly and time-intensive, requiring not just billions of dollars worth of investments in new plants but workers who are trained to staff them.
Although Trump seems to see tariffs as inherently positive, they’re hard to make sense of in the abstract. Orthodox economists tend to see tariffs as inherently negative—inefficient disruptions to the free flow of goods and capital. In reality, tariffs have long been relatively commonplace tool in economic policymaking that can take many forms. Tariffs can be a scalpel applied to specific goods, a sledgehammer to punish entire countries, or—as is often the case—a bit of both. If the goal is to grow manufacturing, they’re perhaps most effectively used alongside other industrial policy tools.
In its own quest to revitalize U.S. manufacturing, for instance, the Biden White House maintained and even expanded several tariffs put in place by the first Trump administration. At the same time, it pushed Congress to spend hundreds of billions of dollars on subsidies and R&D aimed at coaxing companies to invest in strategic growth industries through the Inflation Reduction Act or the CHIPS and Science Act. There are plenty of worthy criticisms of that approach—that it was unnecessarily hawkish, and that the spending side of the equation was far too small—but it was reasonably coherent: penalizing cheaper, in some cases better foreign-made goods would buy time for fledgling domestic industries to catch up as they took advantage of subsidies to make those same goods at home.
The Trump administration has made clear that it’d like to repeal most (if not all) of that spending. As DOGE takes a chainsaw to federal agencies and research bodies, it’s also dismantling state capacities that function as in-kind support to corporations that rely on everything from NOAA forecasts to scientists and engineers whose education has been made possible by the National Science Foundation. The fact that Trump is liable to tear up tariffs and announce new ones at a moment’s notice also creates a climate of uncertainty that’s anathema to the kinds of spending it would take to bring lots of new manufacturing facilities online. Why, that is, would an investor or a company plan to spend billions of dollars in response to a tariff that might not exist next week?
Some commenters have suggested that both tariffs and even DOGE’s slashing of federal agencies are part of a grand, wonkish strategy to weaken the U.S. dollar so as to lead an America First restructuring of global trade. As economic historian Adam Tooze wrote recently, this is wishful thinking. Searching for coherence and rationality in the “clown car” of Trump 2.0 runs the risk of “underestimating the radicalism of the break marked by the Trump administration.” Instead, the White House’s approach, he argued, “may have more in common with grift, a protection racket or a facelift pandering to the ignorant vanity of an old man than with economic policy as we have hitherto known it.”
The Trump administration isn’t poised to revive manufacturing so much as reward whatever companies and executives happen to cozy up to it and fund Republican campaigns. Life will get harder and more expensive in the process, with few upsides for the millions it’d like to kick off of Medicaid and Social Security. The only thing “Liberation Day” will free the country of is the expectation of having a government that functions as anything other than a slush fund for the president’s most enterprising sycophants.
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