Tariffs: Fine for thee, not for me

I’m not an economist, but after sitting through numerous presentations by economists, they’ve all echoed the same insight: tariffs don’t work; tariffs tend to have a negative economic impact.

The Feb. 11, 2025 MarketWatch opinion column by Prof. Peter Morici echoes similar insight, as he wrote, “Trump’s new steel, aluminum, and reciprocal tariffs will boost inflation. Big tariffs on Canada, Mexico, Europe, Japan, and others will weaken those economies, encourage retaliation against the U.S., and drive these reliable U.S. allies into accommodations with Russia and China. Ultimately, America will become isolated, with smaller markets for its technology products and fewer resources for both research and development and advancement in artificial intelligence. This will result in diminished growth and leave the U.S. a poorer nation. That’s why Trump’s tariffs and tax-cut aspirations must reflect voter sentiments. Otherwise, Trump won’t reduce the U.S. trade deficit or boost U.S. manufacturing.”

The moment tariffs were placed, altered, put on hold – tariff whiplash – then more added (steel and aluminum as of the writing of this column), industry associations have asked for exemptions for their industries. AdvaMed President and CEO Scott Whitaker advocated for relief on most medical devices. Jay Timmons, president and CEO at the National Association of Manufacturers wrote “a 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally.”

Right after the November elections Amber Thomas, VP, advocacy at AMT – The Association For Manufacturing Technology, wrote, “AMT believes targeted tariffs should be used cautiously and sparingly… Rather than relying on unilateral tariff measures, the emphasis should be on pursuing multilateral trade agreements that open markets and reduce barriers, fostering a global trading environment that benefits all parties involved.”

And, in the Fortune/Deloitte CEO Survey: Fall 2024, respondents’ optimism about the global economy surged from 7% in Fall 2023 to 42%; but 73% see international trade and tariffs as potential risk for their businesses. The concern is real. In a report by the Board of Governors of the Federal Reserve System, Division of Research and Statistics, the authors summarize that, “After two years of robust gains, manufacturing industrial production (IP) declined by more than 1.5% from December 2018 to July 2019. Notably, this decline followed shortly after the U.S. imposed substantial tariffs on some imports and U.S. trade partners retaliated with tariffs on some U.S. exports… We find that rising input costs and retaliatory tariffs can account for around half of the recent decline in manufacturing IP growth.”

It’s clear tariffs pose significant challenges to manufacturing – boosting inflation, increasing the cost of production, disrupting supply chains, diminishing U.S. competitiveness, creating compliance and regulatory challenges, impacting innovation, and reducing project margins. Tariffs can be a tool for smart industrial and trade policy but shouldn’t be the centerpiece of a national economic strategy.

So, who are the tariffs fine for if many are claiming tariffs are fine for others but not for their industries?