Boosting Domestic Industry
Expanded tariffs aim to shield U.S. manufacturers from foreign competition. Economists warn, however, that tariffs could increase prices and drive inflation.
Donald Trump, as president-elect, has promised to reinvigorate U.S. manufacturing. His strategy includes tariffs as a key tool to promote domestic production. Tariffs increase the cost of imports, encouraging consumers to buy American-made products. Certain U.S. manufacturers, especially those competing with cheaper imports, support this approach. However, economists highlight the risks of unintended consequences, like inflation and higher interest rates.
“It does offer some protection for manufacturers,” said Gary Schlossberg, a strategist at Wells Fargo Investment Institute. “But inflation could work against you, depending on your position in manufacturing.”
Inflation and Consumer Costs
During Trump’s first term, tariffs targeted imports like solar panels, washing machines, and metals. President Joe Biden upheld many of these tariffs, adding new ones on Chinese imports like electric vehicles and semiconductors. Trump’s current proposal suggests even steeper tariffs: 60% to 100% on Chinese imports, plus a universal tariff of up to 20% on goods from other countries.
“We’ll lead an American manufacturing boom,” Trump declared during a speech in Georgia. “When they have to pay tariffs to come in, but have an incentive to build here, they’re going to come roaring back.”
However, economists argue that higher tariffs could increase consumer prices and interest rates. Companies like Autozone and Stanley Black & Decker have already announced plans to pass increased costs to consumers. The Peterson Institute for International Economics estimates that tariffs would cost American households over $2,600 annually. The National Retail Federation predicts tariffs could reduce consumers’ purchasing power by $46 billion to $78 billion each year. For example, the price of $50 athletic shoes could rise to $64, while a $2,000 mattress set could increase to $2,128 to $2,190.
“Most of us feel the tariff proposals are harmful to the broader economy,” Schlossberg said, “even though they may benefit certain types of manufacturing for a time.”
Matt Bigelow, president of Vermont Flannel, worries about inflation’s effect on his business, which relies on European fabric imports. “We’ve all felt the impact of inflation,” he told USA Today. “If tariffs lead to higher consumer prices, that’s a real concern.”
Tariffs’ Role in the Global Economy
Stephen Liquori, CEO of Goodwear USA, sees potential benefits from Trump’s plan. He believes higher costs for imported products could level the playing field for U.S. businesses. However, he’s skeptical that tariffs are a long-term solution. “There are things we don’t make here and probably won’t in the future,” Liquori said. “I’m realistic about that. It’s a global economy.”
Bayard Winthrop, CEO of American Giant, supports a gradual increase in tariffs rather than sudden spikes. Since 2012, his company has become a major U.S. clothing manufacturer, sourcing all materials domestically. “If Trump slapped a universal 20% tariff on day one, that would be devastating,” Winthrop said. “I think we’ll see a gradual increase, and I’m supportive of that approach.” He believes that while tariffs raise costs, they also help rebuild U.S. industrial capacity, strengthen the middle class, and create jobs for lower-skilled workers. “That’s the price you pay to rebuild U.S. industrial capability,” Winthrop stated.
Job Creation and Economic Impact
Despite inflation concerns, some manufacturers see potential for job creation. Drew Greenblatt, president of Marlin Steel, expects tariffs to boost his company’s competitiveness. Marlin Steel’s reliance on U.S.-sourced steel limited its benefit from Trump’s earlier tariffs, which excluded fabricated steel from China. Greenblatt anticipates needing to double his workforce of 115 employees if new tariffs are implemented.
“We’re going to win jobs back from Chinese vendors,” Greenblatt said. “This is going to be great for American factory workers.”
A universal 10% tariff could create 2.8 million jobs, according to a study by the Coalition for a Prosperous America. However, the Brookings Institution reported that while Trump’s earlier tariffs created steel industry jobs, they also led to job losses in industries reliant on imports or affected by retaliatory tariffs.
Scott Paul, president of the Alliance for American Manufacturing, advocates for “strategic application” of tariffs, especially on Chinese imports. “Escalating tariffs on some Chinese products has merit,” Paul said. “If we want to decouple or de-risk our economy from China, that’s a crucial policy step.”