Trump Aims to Revive American Industry Impacted by Years of Unfair Trade through Tariffs

Will “Liberation Day” — this Wednesday, when the Trump administration reveals its new tariff strategy — be regarded in the same light as Dec. 7, 1941, a “day of infamy”? Or will it, as President Trump and his supporters envision, signal the start of a new “Golden Age” for American manufacturing and the economy?

One fact is indisputable: The problematic post-Cold War period, characterized by Washington’s reckless abandonment of American industry to placate communist China and other exploitative trading partners, has come to a close.

After the Berlin Wall fell in 1989 and the Soviet Union fell apart in 1991, the US could have redistributed more defense spending responsibilities to allies like Japan and Germany, all while rejuvenating its manufacturing base—the true foundation of military might in the industrialized world.

Instead, during the tenures of Bill Clinton, George W. Bush, and Barack Obama, the globalist faction in Washington irresponsibly amplified America’s military obligations, engaging in conflicts in Afghanistan, Iraq, and elsewhere without any exit plans.

Trump is charting a different course, demanding greater defense spending from allies while striving to restore a degree of American manufacturing capacity that was allowed to move overseas during the globalization era.

Over the last few decades, both Democrats and Republicans permitted Japan, Germany, and other allies to maintain continuous trade deficits with the US in manufactured goods, to the detriment of American manufacturers.

American multinational corporations closed factories in the US and relocated production to China, Mexico, and other nations to take advantage of lower labor costs and local government subsidies.

Even worse, the bipartisan policy elite in Washington ignored the unfair practices of communist, state-capitalist China as it improperly subsidized its manufacturing sector with the aim of eliminating manufacturing jobs in the US and other countries.

The reality of America’s reliance on communist China for medical and manufactured goods was starkly revealed during the COVID-19 pandemic.

Tariffs—taxes on imports—are a vehicle for achieving the goal of “reshoring” manufacturing back to America. By elevating the cost of certain imports, Trump intends to enhance the market for those products domestically among American manufacturers.

Foreign businesses can circumvent these tariffs by establishing plants in America and employing American workers.

Does this tariff-centric approach to import substitution have the potential to succeed? Absolutely. Before World War II, the US effectively utilized high tariffs to nurture its industrial base, ultimately emerging as the leading manufacturing powerhouse globally.

Countries like Japan, South Korea, Taiwan, Germany, and China have all leveraged tariffs, subsidies, or regulations to bolster their own manufacturers and increase their global market shares.

Tariffs can indeed succeed in replacing foreign production with domestic capabilities.

The sole inquiry is whether the costs associated with Trump’s tariff-based reindustrialization strategy outweigh the benefits.

Opponents emphasize the immediate consequences, particularly the potential for increased prices for American consumers and businesses reliant on imports from China and other countries. They argue that tariffs could lead to heightened inflation.

However, focusing solely on these short-term adjustments overlooks the long-term cost of permitting an authoritarian, state-controlled China to monopolize critical industries—such as electronics, civilian drones, and electric vehicles—and dominate the global economy.

Slightly elevated consumer prices today are warranted to ensure that America’s healthcare system is not reliant on China during future pandemics, and that the US military does not depend on Chinese supply chains.

Trump aims to align American trade policy with military policy, a separation that took place after the Cold War.

Proponents of globalization claimed that the US, as the “sole remaining superpower,” would voluntarily provide security for a harmonious world interconnected by a free global market.

However, the resurgence of major power rivalries, highlighted by China’s military expansion and Russia’s invasion of Ukraine, has rendered the distinction between trade and defense obsolete.

In a new world order characterized by military-economic blocs in rivalry, countries seeking American military support should not engage in trade with America’s adversaries or undermine America’s industrial capabilities through unfair trade practices.

Criticism of the chaotic manner in which the Trump administration has implemented its trade strategy is valid. Additionally, leveraging tariffs for immediate political gains—such as penalizing Mexico and Canada for failing to halt fentanyl trafficking and illegal immigration—alienates our neighbors and creates instability for businesses and investors.

Nonetheless, despite its expensive and imperfect nature in the short term, Trump’s Liberation Day initiative holds the promise of liberating America from three decades of ineffective globalist policies in both trade and national security.

Michael Lind is the economics editor of Commonplace and a fellow at New America.