By james art 
By Satya Marar | Postgraduate Fellow, Mercatus Center at George Mason University
Former President Donald Trump recently threatened tractor giant John Deere with 200% tariffs if it goes ahead with plans to move some of its production to Mexico before 2027. Economists have criticized the proposal, believing it would increase costs for struggling farmers, add inflationary problems in the US, and provoke retaliation from Mexico that will further harm Americans.
Trump and his fellow populists seem unfazed, but they need to look into what’s going on. Tariffs are already backfiring on the workers and industries they are supposed to protect.
Ironically, Deere’s move was likely prompted by cost pressures, including those absorbed by the 2018-19 steel tariffs imposed by Trump and supported by the Biden administration.
This should not surprise us. Such tariffs particularly adversely affect consumers and industries that rely on imported inputs, such as heavy or advanced manufacturing.
However, both major parties now accept tariffs to protect US jobs. They are sometimes justified on grounds of “national security”, which are often false.
In 2018-19, Trump imposed a range of tariffs on imports, including a 25% tariff on steel and a 10% tariff on aluminium. Six years later, these and other tariffs remain in place with some exemptions and exceptions, with Trump promising to increase them significantly if elected.
President Biden’s administration has maintained the steel tariffs despite his previous condemnations, citing national security concerns, even though they disproportionately affect countries considered US allies. America imported some steel from China.
The tariffs had the opposite effect, leading to slower export growth. As U.S. manufacturing jobs that use steel as a raw material outnumber steelmaking jobs by 80-1, domestic producers have closed plants and downsized due to less available raw materials. General Motors alone cut thousands of jobs after the tariffs cost them more than $1 billion in 2018.
The researchers found that, in conjunction with other import tariffs for 2018-19, the damage was equivalent to a 2 percent tax on all U.S. exports, costing $900 for each affected worker by 2020. Even in regions where protected industries operate, A 2024 study on imports found no significant protective effect of tariffs on jobs, but instead found that retaliatory tariffs by other nations had a clear negative effect on employment in US sectors.
It’s a tale as old as time. Of course, a few well-run businesses can profit from pricing their competitors. The costs are ultimately paid not by the targets of the tariffs, but by American consumers and businesses to whom they are passed on, harming workers and reducing domestic employment opportunities.
Long-standing tariffs benefiting U.S. sugar producers, for example, have pushed U.S. consumers toward imported candy and U.S. candy makers toward offshore production, while cutting American jobs. Similarly, steel tariffs helped domestic steelmakers but made U.S. scrap producers less competitive, causing Americans to buy foreign appliances.
Proponents of tariffs like to argue that they are playing “four-dimensional chess,” using tariffs strategically to get other countries to lower their protectionist trade barriers. With some exceptions – such as the successfully renegotiated USMCA trade agreement – this argument does not hold up.
President Biden, Vice President Kamala Harris, Trump and his running mate JD Vance say the tariffs on China are necessary for national security. Yet they also support or maintain tariffs that make American firms less competitive against Chinese counterparts, while punishing potential global allies who could help counter China’s protectionism and intellectual property theft, which is damaging of American companies.
Rhetoric around punishing other countries and US firms that take advantage of global supply chains gives the tariffs populist appeal. However, failure to temper populism with pragmatism will hurt American manufacturing, workers, and raise the cost of living. It also left the country less competitive and less well positioned to make the most of its connections on the world stage.
Editor’s note: Satya Marar is a graduate fellow at the Mercatus Center at George Mason University. Reader reactions, pro or con, are welcome [email protected].