Toward a Forward-Looking Tariff Policy

The early reviews of Trump’s manical taiff fiasco are in: the stock market has cratered. And while the market is a lousy window into the worthiness of one particular policy or another, it does provide an excellent early warning sign. 

So let’s talk trade. If Trump really wanted to tie his legacy to tariff policy, he could have at least done it in a forward-looking manner; here’s how that might have played out…

For decades, we’ve chased the dream of boundless free trade, promising cheap goods on every shelf. Now, we’re waking up to the real price of that “bargain.” Entire swaths of American industry have withered, and communities once proud of their manufacturing heritage have been hollowed out. Meanwhile, our dependence on fragile global supply lines has never been clearer—think back to the scramble for medical supplies during the pandemic.

Entire swaths of American industry have withered, and communities once proud of their manufacturing heritage have been hollowed out.

It’s time for a strategic tariff policy that does more than slap random duties on foreign goods. If done right, tariffs can be a powerful tool for rejuvenating our industrial backbone. But let’s be clear: we can’t repeat the mistakes of the past. The infamous Smoot-Hawley Tariff Act of 1930 taught us that blanket protectionism can ignite ruinous trade wars. Today, we need a disciplined approach that defends domestic producers where it matters—think semiconductors, clean energy, and other industries critical to national security—while keeping inflation in check.

How? Start with carefully calibrated tariffs on key imports, perhaps 10 to 25 percent, not only to encourage U.S. firms to produce but also to discourage predatory practices abroad. Sunset reviews—say, every two or three years—would force policymakers to adjust these rates based on actual data, so we don’t end up protecting outdated industries indefinitely.

We’ll also need complementary policies: use the revenue from these tariffs to fund workforce training and technological innovation. Reinforcing that idea, Alexander Hamilton proposed the original notion of shielding “infant industries,” anticipating that once they gain scale, costs fall and global competition becomes manageable. However, it only works if we simultaneously invest in infrastructure, research, and the people who will make those industries flourish.

Reinforcing that idea, Alexander Hamilton proposed the original notion of shielding “infant industries,” anticipating that once they gain scale, costs fall and global competition becomes manageable.

Yes, there may be an uptick in prices—especially on items that used to be dirt cheap thanks to foreign subsidies and low wages abroad. But given how vulnerable we’ve become, a modest rise might be a worthwhile trade-off. Think of it as an insurance premium: we pay a bit more now to ensure domestic resilience and good jobs down the line.

Critics fear retaliation, but targeted tariffs coupled with transparent diplomacy can minimize the likelihood of a full-blown trade war. And let’s not forget that when we’re a large share of the global market, we can nudge international players to meet us halfway on fair labor and environmental standards.

That’s the gist: a selective, data-driven tariff policy designed to rebuild the industrial core that made America an economic powerhouse in the first place. Couple it with flexible reviews, a shot in the arm for homegrown industries, and we stand a real chance of seeing “Made in America” mean something again.

Of course, no single tool can mend everything. But if we’ve learned anything from the hollowing out of our manufacturing heartland and the chaos of COVID-19 supply chains, it’s this: the status quo isn’t serving our national interest. A smarter tariff strategy is one concrete step toward a more secure, prosperous American future.