Are tariffs good for U.S. workers?
Open mic nights + cowgirl wisdom (Issue #294)
A tariff is a “tax placed on goods when they cross national borders.” Example: the “The Chicken Tax,” a term that confusingly describes tit-for-tat tariffs that partially remain in place today. In the early 1960s, European countries levied a tariff on U.S. chickens, so that European farmers weren’t priced out of the chicken market. In response, President Johnson levied a tariff on European exports, such as potato starch, brandy, and automobiles. (And that, kids, is how the “Chicken War” started.)
Trump recently decided to impose tariffs on several countries, then paused some, then suspended some, and then promised that reciprocal tariffs are coming in April. The talking head class mobilized, either barking that tariffs are an effective and underused economic and policy tool, or that they will destroy life as we know it. So I decided to figure out what’s up, narrowing my focus to one seemingly simple question: “Are tariffs good for U.S. workers?”
Roger Martin, strategy advisor and former dean of Toronto’s Rotman School of Management, suggests they are, citing Harvard Kennedy School Professor Dani Rodrik for the proposition that “freer trade massively damages the economic prospects of a large swath of workers — primarily low-medium skilled workers in tradeable goods industries — from which they never recover. Everyone else in the economy gets the benefit of cheaper goods while these workers are sacrificed.” In short, without tariffs, manufacturers will always choose foreign cheap labor to maximize profit.
While not, on its face, related to the benefit or disadvantage to the U.S. worker, an administration might take the gamble anyway because tariffs can be used to make other countries support our domestic policy goals. As mathematician and data scientist Laurel W writes, the Trump administration’s threatened tariffs against Canada and Mexico are designed to force both countries to increase border security. (If they comply, the U.S. will ease up on those threats.) “Tariffs,” she writes, “are not merely economic instruments; they are geopolitical tools of coercion.”
But these potential economic and policy wins are outweighed by the unavoidable fact that supply chains are dizzyingly complex — foreign thingamabobs are often necessary to make domestic thingamajigs — and therefore U.S. manufacturing may become more expensive with tariffs, not less. This would further incentivize manufacturers to find cheap foreign labor, potentially leading to a decrease in jobs rather than an increase.
Reynolds Taylor, a human rights lawyer, articulates this point well, explaining that even U.S. manufacturers who label their wares “made in U.S.A.” frequently import materials. (For instance, Honda has 12 manufacturing plants in the U.S. but some of its engines are made in Thailand and Japan.) If manufacturers search for cheap foreign labor in response to tariffs, it could result in “the lowest international standards for health and safety, labor rights, or decent wages.” Even if you don’t care about exploiting foreign workers, there is no economic benefit to the exploitation anyway, because there is no quid pro quo: A 25% tariff on foreign goods will not result in “a 25% increase in funds available to the American public,” she points out, because any profit would be offset by slower consumption and shrinking markets.
My conclusion? I understand why people feel that tariffs could be an effective tool. But after reading Taylor’s piece, it doesn’t seem like the juice is worth the squeeze.
🎤 What else we’re reading
- In a world increasingly governed by algorithms and AI, Richard Owen Collins reminds us that there is still open mic night, where freedom, spontaneity, and imperfection flourish.
- A top highlight on Medium last month, via our February roundup: “When did we forget how to do something purely for its own sake?” (JA Westenberg in “You Don’t Have to Monetize the Things You Love”)
- Poetry from Ismael S Rodriguez Jr about a humble (yet deeply important) family game of dominoes:
When shuffling, tell stories about your prima’s new boyfriend
who “doesn’t even know how to make pegao.”
Let the tiles speak their own chisme as they scrape
across formica worn smooth by three generations
of elbows and arguments…
💡 Your daily dose of practical wisdom
My friends and I are horse-obsessed and we often remind each other of this quote from 1861, attributed to cowgirl Marie Lords: “a cowgirl gets up in the morning, decides what she wants to do, and does it.” I couldn’t find any real proof on the internet that Lords actually existed or even said this, but even potentially fake wisdom can pack a punch.
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