7 Reasons Trump Tariffs Will Fail That Even a 7th Grader Can Understand

No matter your political stripe or educational background you are no doubt aware of the rapid-onset, broad-scope tariffs US President Trump has imposed on 200 countries. The Trump White House and defenders have provided several reasons the tariffs were introduced, but the core is to force a relocation of manufacturing factories and jobs to the United States from other countries.

Here are seven reasons that even a 7th grader can understand why high tariff policies will fail to have the desired effect:

1. 45% of imports to the US are just inputs American factories use to make finished goods. It is impossible to manufacture many products without these inputs and those inputs cannot be replaced with domestic inputs for many many years… if ever.
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2. About 5% of imports to the US are things like coffee that cannot be mass produced in the United States. Things like Coffee, Rubber, and Bauxite (Aluminum ore) just does exist in volume in the US.
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3. Companies will not build large factories in the United States if the economics of doing so are based on tariffs that can, (and almost certainly will be) removed within months or years. Rapid-onset, broad-scope tariffs result in paralysis, not expansion.
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4. Other countries will aggressively work together to work with each other and cut-out the United States. Many people think President Trump is just “winging it”, but he is following a serious economic logic laid out in the video below. Unfortunately, that theory is predicated on the premise that other countries do not create retaliatory tariffs. The media may be unaware of this economic theory, but economists and senior government officials in other countries are well of it, and will not be cowed into jumping of and economic cliff. They have and will retaliate, which will damage their own economies, but will also make it nearly impossible for rapid-onset, broad-scope tariffs to work to US advantage
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5. Rapid-onset, broad-scope tariffs show the United States, cannot be trusted to adhere to economic norms (even those norms constructed by the US, like WTO or trade deals like NAFTA/CUSMA). The natural result will countries and companies will work to reduce their exposure to the United States market.
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6. Tariffs are just and import tax that is paid by the consumer, in this case the American public. Almost 60% of American’s earn less than $50K / year and just don’t have the capacity to eat those higher costs. High tariffs will be politically untenable quickly.
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7. While Americans have an outsized market impact at a massive 20% of the worlds consumption, that leaves about 80% elsewhere. Further, while the US consumer has been the primary beneficiary of the post-WWII global economic and legal system built by the US, it has been stagnating over the last decade. Put simply the rest of the world is developing much faster than America. Allowing (or in the case of rapid onset high tariffs, requiring) other countries “go around” America is a recipe for eventual collapse in the long run, not expansion.

A Canadian Example to Consider

Do you really think that if General Motors were to close its Oshawa pick up truck assembly plant, or Ford to kill its Oakville SUV assembly and relocate it to the US, that Canada wouldn’t simply:

1. impose high tariff’s on GM and Ford products, massively reducing their Canadian market volumes (a notable market of nearly 1 million passenger vehicles a year!)
2. sign a trade deal with reliable partners like Germany, Japan or South Korea to produce BMW Hondas, Kias in Canada instead

Think 3 steps ahead, not 1.

What Happened After Trump 1’s Tariffs?

Here are the employment facts of the Trumps previous tariffs, which were quite mild in comparison to the recent round:

Decline in Manufacturing Employment:

• A Federal Reserve Board study found that the 2018-2019 tariffs (enacted after the 2016-2017 period but reflecting a similar policy direction) were associated with a relative reduction in manufacturing employment. The positive effect of import protection was offset by larger negative effects from rising input costs and retaliatory tariffs.
• Econofact reported that the Federal Reserve found the tariffs caused a 1.4% reduction in manufacturing employment. Modest gains from shielding domestic producers were “more than offset” by rising production costs and retaliatory tariffs. They also note that while manufacturing jobs increased between January 2017 and September 2024, the job creation rate and manufacturing’s share of total employment were lower than pre-tariff rates.

Weakening of Manufacturing Investment:

• The same Federal Reserve Board study noted that the tariffs led to relative increases in producer prices due to rising input costs, potentially discouraging investment.
• The Peterson Institute for International Economics (in a 2019 analysis of the 2018 tariffs) found evidence of a negative impact on manufacturing investment.

Can Tariffs Work?

All of this this is not to say that narrowly targeted tariffs, especially ones that are communicated well in advance, can not have desirable outcomes. It is to say that massive tariffs (say anything over 10%), brought in without warning, will not result in more investment or jobs.

Rapid-onset, broad-scope tariffs will not help America grow or develop. Trump’s trade War with the world is one more step down the two-hundred year decline of the American Empire.