JQCO, Ph.D. [in training]

Commentary from a communications perspective

Trump’s tariff plan is objectively bad. Why are people supporting it? Messaging, that’s why.

Published by

on

There’s no need to litigate established fact. Tariffs are a bad idea. They’re the stuff of undeveloped economies that can’t compete on a global scale. Their anti-competitive nature sacrifices market efficiency to protect lagging domestic industry. Countries that impose tariffs typically see less competition and therefore increased prices for affected goods, because the protected industries no longer have external producers to compete with. They can hijack the local market all they want – the choice is now between buying and not buying, instead of between similar products. The jobs tariffs create do not make up for the increase in prices that they naturally cause. They hurt trade relations and start a domino effect of tit-for-tat tariff exchanges between warring parties.

And no, the importer pays the tariff, not “Chyna.” And they’re not eating that cost out of the goodness of their hearts.

But given that we all know this (or at least should), why do people still support the idea of tariff? Well, it’s how it’s communicated. And boy does the Trump campaign like using fear and retribution as messaging frames for bad policy.

Job creation

Everyone wants to hear that jobs are being created as a direct result of economic policy. But no one celebrates them more than those who espouse this romanticized idea of the American job – that which would exist if not for those pesky companies who are doing it better and cheaper than us. Instead of Americans supporting the local economy, they are being forced to buy the more competitive product. Well, that’s just the free market doing its work, which typically they support, except when it doesn’t suit them to do so. To believe that such jobs would exist if not for others doing a more efficient job than American companies could is counterfactual thinking. We don’t know that those jobs would exist in America without foreign producers. I guess a tariff would help us settle the debate once and for all.

But to think that those jobs would come back home while the prices of tariffed goods remained the same? That’s not counterfactual thinking. That’s wishful thinking.

Revival of manufacturing sector

While tariffs might help some manufacturing jobs, they do not offer any guarantees to generate enough to offset job losses in other sectors affected by retaliation or cost increases. Remember, other countries can impose tariffs on the US too for other goods. So you lose some to win some. Would the win be worth it? Or would it be some sort of Pyrrhic victory that comes at such a high cost that it might as well be chalked up as a loss?

The bigger factor in the elimination of manufacturing jobs is automation, not competition.

Revenge for being taken advantage of

MAGA fans love this. The message of Trump changing the power dynamics between the US and its trade partners comes right out of the populist playbook. Paint the people as the victims, mutual partners as the villains, and you as the only one who can save the country. People willingly purchase cheap goods because that’s either what they want or what they can afford. None of this has anything to do with foreign producers holding consumers hostage. They can easily choose not to buy imported goods. But when Trump frames it as retaliation for decades of profiting off American consumers (what else is a company supposed to do, exactly?), it becomes a matter of protecting national interests against big bad Chyna.

Economic sovereignty

“America First” and all that. Tariffs are being framed as a tool to regain economic sovereignty by ending reliance on imported goods. Who wouldn’t want a vision of a self-sufficient America, able to provide for its critical needs without having to buy from some foreign power and, in the process, compromise its geopolitical position?

You know who else is all about that? North Korea.

But can Americans afford it? It means higher prices for goods because you can no longer take advantage of lower production costs offered by foreign markets. Additionally, it means lower exports, because why wouldn’t another country want economic sovereignty for itself too? They’ll import less – and the US is the second-largest exporter in the world, sending over $2 trillion worth of goods to the export market in 2022.

This also leads to reduced global competitiveness, because domestic companies no longer have to compete on the world stage and American consumers end up having to contend with whatever product they can get. It’s like deciding not to play with the neighbor kids anymore because they’re better.

Reduction of trade deficit

Tariffs stimulating domestic industry means that the US would have to import less and, therefore, reduce its trade deficit. That’s a good economic indicator, right? Trade-positive economies protect domestic industries from job losses, do not prop up other countries’ GDPs, and halt the decline of key business sectors, so that’s something everyone should strive for.

But tariffs will create a perverse effect for the US, where in its pursuit of lowering trade deficits, the measures that it puts in place end up with the opposite of the intended outcome. This is a global economy and everyone has their hands in everyone else’s pot. Enabling domestic production for one sector may reduce imports for those goods, but the retaliatory effect of countries imposing tariffs on US goods will undoubtedly reduce its exports. With America’s position as the world’s top exporter, second only to China, it’s in a much more vulnerable position than most.

Leave a comment