Trump is set to throw another tariff tantrum at the state of the union. Economists know better.

As the State of the Union address approaches, whispers and predictions suggest that former President Trump might once again take the opportunity to champion his protectionist trade policies. Dubbing himself “Tariff Man,” it seems he’s poised to pull another “rabbit out of his hat” – or perhaps, more accurately, unleash another round of tariff threats. But before anyone gets swept up in the rhetoric, it’s crucial to understand why economists, almost universally, know better.

When Trump proudly declared himself “Tariff Man,” it signaled a distinct departure from decades of conventional trade policy. His administration initiated significant tariffs on goods from China and other countries, aiming to protect domestic industries and leverage trade negotiations. The idea, often presented, is that tariffs are a powerful tool to force other nations to play fair, bring manufacturing jobs back home, and reduce trade deficits.

However, the economic reality is far more complex and often counterproductive. Tariffs are essentially taxes on imported goods, and while they might sound like they’re paid by foreign producers, the cost almost always falls on domestic consumers and businesses. This means higher prices for everyday goods, increased costs for manufacturers who rely on imported components, and a potential reduction in consumer purchasing power. Furthermore, tariffs often invite retaliatory tariffs from other countries, leading to trade wars that harm export-oriented industries and disrupt global supply chains.

The “rabbit out of his hat” analogy suggests a clever, almost magical solution to complex economic problems. Yet, for most economists, tariffs are less a magic trick and more a well-understood, often detrimental, policy tool. They understand that while a tariff might offer short-term relief to a specific industry, the broader economic impact tends to be negative, stifling innovation, reducing competition, and ultimately costing jobs in other sectors.

So, when you hear the drumbeat for more tariffs, don’t be confused. It’s not a revolutionary new strategy, nor is it a path to guaranteed prosperity. Instead, it’s a familiar play from a well-worn playbook, one that has been thoroughly debated and largely dismissed by those who study economic trends and global trade for a living. The real cost of tariffs is paid by everyone, even if it’s hidden in the price tags of the goods we buy.

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