The recent wave of protectionist experimentation has been underway for years now. The first Trump term brought a surge of tariffs, many of which the Biden administration chose to keep. Then the Biden White House layered on its own tariffs. Add “liberation day” and the on-again, off-again tariff drama since, and the result is simple: the United States now has far more tariffs on far more imports, and it’s suffering from a damaging level of uncertainty.
The goal of tariffs, in part, was to raise manufacturing employment. Given that more than half of U.S. imports consist of intermediate goods — inputs used by American manufacturers — these tariffs inevitably raise production costs. That alone should make the trend of a weakening manufacturing sector unsurprising. New data show that 58,000 manufacturing jobs have been lost since “liberation day.” Other forces are at play, of course, but one thing is clear: Since 2016, the trend line has not moved in the direction populists promised it would. Manufacturing losses are accelerating, and the United States is losing blue-collar jobs, not adding them.
This may explain why the administration is now mostly touting the investments that its trade deals are allegedly bringing into the U.S. Assuming these investments really take place, however, they will add to the trade deficit, which is already growing.