Why Trump’s Tariffs Are Unlikely to Stand the Test of Time

By A Staff Reporter

The Trump administration’s renewed push for tariffs is facing skepticism, not only from economists but also from market realities. On Tuesday, the U.S. imposed a 25% tariff on imports from Canada and Mexico, along with an additional 10% tariff on Chinese goods. While Canada and Mexico successfully negotiated a one-month delay, Beijing was hit with an initial 10% tariff last month. However, economic forces suggest that at least some of these tariffs will likely be rolled back—it’s only a matter of time.

Structural Challenges in the U.S. Economy

At its core, the American economy is structured around trade. Since World War II, the U.S. has consistently consumed more goods than it produces domestically, leading to a trade deficit. This means that even under full employment, the country relies on imports to meet consumer demand.

Former President Donald Trump has long argued that this trade deficit is a sign of economic weakness, using it as justification for tariffs. However, this view oversimplifies the issue. The deficit is not just a result of trade policies but also of economic realities—high labor costs in the U.S. make it inefficient for American workers to produce certain goods domestically, such as garments or consumer durables. Instead, countries with cost advantages in labor or raw materials are better positioned to manufacture these products and export them to the U.S.

Why Tariffs Are Unlikely to Last

A study by economists from the Massachusetts Institute of Technology (MIT), Harvard University, the University of Zurich, and the World Bank concluded that the tariffs imposed during Trump’s first term had no measurable effect on U.S. employment. While they were meant to protect American jobs, they neither boosted nor reduced employment levels.

Moreover, tariffs often lead to higher costs for consumers and businesses, diminishing any potential economic benefits. Retaliatory actions from affected countries can further disrupt supply chains and hurt American exporters. Given these factors, if economic logic prevails, the U.S. will be forced to reconsider its tariff policies.