The Trump Tariffs: Why Free-Trade Is the Only Way Forward
The United States has taken a very strong protectionist stance on global trade. With the recent tariffs imposed by the Trump administration, which include 10% baseline duties on most imports, a staggering 145% on Chinese goods, and targeted tariffs on European and automotive imports, the debate over the nation’s trade policy has become highly contentious. While the stated intention behind these tariffs is to protect American industries and workers, the evidence shows that the costs far outweigh the benefits. If the U.S. wants to sustain growth, preserve jobs, and keep inflation in check, it must return to a free market approach that is rooted in open trade.
Federal Reserve Chair Jerome Powell’s recent warnings are stark. He stated that the new tariffs will likely increase both inflation and unemployment for the rest of 2025, noting that the economic uncertainty triggered by these changes has already affected business sentiment and consumer confidence. According to Powell, these effects may persist throughout the year, as consumers absorb the higher costs of imported goods and slower economic growth leads to increased unemployment. The United Nations Trade and Development projects that U.S. GDP growth will fall to just 1% in 2025, a sharp drop from 2.8% in 2024. Meanwhile, JPMorgan Chase places the likelihood of a U.S. recession at 60%, noting trade tensions and global instability as key drivers.
The fundamental flaw in the tariff strategy is that it treats trade as a zero-sum game, rather than a mutually beneficial exchange. Tariffs are, at their core, taxes on imported goods. The Tax Foundation notes that, historically, trade barriers such as tariffs have led to lower incomes, reduced employment, and diminished economic output. These impacts are not just theoretical: they are already being felt in the form of higher prices at the checkout counter and increased costs for American manufacturers who rely on imported inputs.
One of the most persistent myths is that tariffs protect American jobs. While it’s true that some manufacturing sectors may see a short-term boost in employment, the broader impact is negative. A recent Goldman Sachs analysis found that a 10 percentage point increase in tariff rates might boost employment in protected industries by 0.2% to 0.4%, but that a 1 percentage point rise in tariff-driven costs lowers employment by 0.3% to 0.6% in downstream industries that rely on those imports. Scaling these estimates to the U.S. economy, the report suggests that while tariff protection could add just under 100,000 manufacturing jobs, it would simultaneously create a drag of roughly 500,000 jobs in other sectors, a net loss of about 400,000 jobs. In other words, for every job “saved” by tariffs, several more are lost elsewhere.
The economic drag doesn’t stop at jobs. Tariffs also act as a regressive tax, hitting lower- and middle-income households the hardest. As the Tax Foundation highlights, the increased tax burden from tariffs falls disproportionately on these groups, who spend a higher share of their income on goods most affected by tariffs, such as clothing, footwear, and household essentials. The result is a reduction in real income and a diminished standard of living for millions of Americans.
The argument for a free market solution is not just theoretical, it is grounded in decades of evidence. After the conclusion of WWII, protectionist trade policies were largely abandoned for relatively open trading structures. This shift has delivered widespread benefits, including higher income levels, lower prices, and greater consumer choice. Estimates of the post-war gains from freer trade range up to $10,000 per household in the United States, driven by increased competition, innovation, productivity, and output. Free trade enables nations to specialize in what they do best, producing more goods and services for less and exchanging them for goods and services from other countries, resulting in higher levels of consumption than are possible without trade.
Moreover, free trade is a powerful engine for innovation and efficiency. By exposing American businesses to global competition, it forces them to innovate, reduce costs, and improve quality. Over time, this process leads to higher wages, more investment, and a more dynamic economy. As the Mercatus Center notes, at least half of U.S. imports are not consumer goods but inputs for U.S.-based producers. Freeing trade reduces these input costs, promoting economic growth and ensuring that American companies remain globally competitive.
The alternative, continued reliance on tariffs, risks pushing the U.S. economy into stagnation or even recession. Policymakers should resist the temptation to erect new barriers and instead double down on the principles that have underpinned decades of American prosperity: openness, competition, and free exchange.
