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How Will We Know If The Trump Tariffs Were A Good Idea?

I’ve been reading up on the tariffs that were imposed during the Trump administration and I keep seeing mixed reviews about their effectiveness. On one hand, they seemed to protect certain domestic industries by making imported goods more expensive; on the other hand, there’s a lot of talk about higher prices for consumers and retaliatory measures from trading partners.

The thing is, these tariffs aren’t exactly popular among everyone. If we were to look back 1 year out, 2 years out, and even a few more years down the line, how will we actually know if this was a good move?

Surely there are some metrics or outcomes that can help us evaluate their success or failure. I guess it's not as simple as checking stock market performance alone, although that’s probably part of it, right?

Is it primarily about looking at changes in trade balances with countries like China, or do we need to consider the broader economic impacts, such as job growth within certain industries? And how much weight should be given to the political ramifications, like strengthened relationships (or tensions) with trading partners?

I’d love to hear your thoughts on what metrics or indicators would help determine whether these tariffs were indeed a beneficial strategy. Thanks in advance for any insights!

56 comments

  • Ok, another answer closer to the ground. 2 goals are often invoked. Reduce the trade deficit and increase domestic manufacturing.

    1. Trade deficit

    ... means that more goods (and services) come into the US from the rest of the world than the US delivers in return.

    Reducing the trade deficit makes Americans poorer by design. There will be fewer goods available for Americans, either because they have to give up more to the rest of the world, or because they don't come into the country in the first place.

    The rest of the world is willing to loan money to people, companies, and governments in the US. It is also eager to invest in the country, because it really was a good place in which to do business. Look at the current big thing: AI. You can't really do that in the EU, and investing in China has its own risks. Trump may actually reduce the deficit by making the US more of a South American style banana republic.

    1. Manufacturing in the US.

    One manufactures stuff outside the US and transports it there because it is more efficient. Americans can be more profitably employed in different areas. Moving more manufacturing to the US should be expected to leave the average American poorer. It should not be expected, in isolation, to reduce the trade deficit as it creates new investment opportunities that potentially attract foreign money, increasing the deficit.

    However, while Americans would be left financially poorer, there may be benefits not captured by conventional econometrics. Maybe manufacturing is more emotionally satisfying in a way that is not captured by only looking at the wages. Who knows?

    Unfortunately, getting to that state will be brutal. Millions of people will have to find and learn new jobs. That is what happened when manufacturing was off-shored. Reversing that will have the same cost. Some economists have come to believe that the psychological cost of such structural changes has been vastly underestimated, and that is why trade agreements are so unpopular. The benefits from free trade may not outweigh the psychological pain and disruption of communities. Reversing free trade will have similar effects, that are likewise virtually impossible to measure.

    I think the most objective benefit would arise if a war happened that disrupted trade. For example, if Trump invaded Canada and Greenland, this would probably lead to the US being embargoed. Then it would appear good to have already built manufacturing capacity in the US while it was still easy. You need physical goods to fight wars, after all.

  • there are people who are completely happy with the economy going to absolute shit as long as its by the hand of conservatives.

    literally ran into red-hat magas living on disability from the VA whose children are all now unemployed and they couldnt be fucking happier.

    these people will absolutely eat trumps feces if it means a democrat has to smell it. there is no reasoning. facts do not fucking matter.

  • That's kind of subjective.

    There are two broad views on whether something 'was a good plan.' Generally, everyone agrees that accomplishing the intended goal is the first requirement, but people tend to divide then on whether there is a secondary requirement. Many hold that the second necessary requirement is that the action doesn't violate prior tenants.

    e.g. if the goal is to get children out of a burning building, actually getting them out is generally a minimum requirement for 'a good plan', however, if the plan is to get them out by punting them out the window, it would be argued by many that the plan was bad because it violates a prior tenant to not hurt the children.

    For the tariffs, it is almost a given that it will create a better business environment for companies that want to compete in sectors where tariffs act as a protectionist measure. However, it is also generally a given that the tariffs will cause financial pain for the average American, whose standard of living depends on cheap foreign labor. For many people, the damage done to the American public is like the punting. It violates established values, and thus becomes a bad idea.

    This also all assumes the stated goal is the real goal. The claim is the tariffs are intended to help American businesses, but the general interpretation is that's a lie. Many people believe the tariffs are simply a threat to get obedience from other governments. From this view, the tariffs are a failure, because essentially no power has been gained over the rest of the world, and many places that were cooperating freely before now have antipathy toward the US.

  • The most meaningful metric of any economy in my opinion is always median real income. It means whether most people are more able or less able to live the life they want (to vastly over-simplify).

  • I am not an economist, but I'd think a couple of reasonable metrics would be:

    • Taxes raised through tariffs are enough to significantly replace a significant portion of personal income tax burden across all taxpayers, while not raising the price on goods so much as to negate that benefit.

    The math we've seen so far does not come anywhere close to supporting this. According to the St. Louis Fed, personal income taxes collected in 2024 was about $9.6 trillion. The increased tariffs have pulled in $6.3 billion in the past month, according to the Treasury Department, as reported in Newsweek. Extrapolated for the year, that comes out to about $0.08 trillion, or 0.8% of what is collected in income tax. The numbers don't add up even if the tariffs collected increase once the actual rates are stable, nor does this administration seem interested in giving a tax cut to anyone other than the wealthiest taxpayers, nor would I implicitly trust the numbers from this administration's Treasury Department.

    Furthermore, that doesn't address how much of the tariffs are past to the consumer - which will be damn near all. Also, around 30%* of tax returns were for $0 in taxes due to low income and various exemptions, so the inflation in goods will be a net negative - as you can't cut a $0 tax - for what is mostly the poorest third of the population. Inflation induced by tariffs are about as regressive a tax as there is. (*The figure I have for this is 31.42% in 2022 according to the National Taxpayers Union Foundation. I'm assuming the figures aren't wildly different for 2024.)

    • Increased manufacturing in the US, especially in strategically valuable goods, such as semiconductors.

    This is a less quantifiable benefit, but can be good for supply chain stability and national security, in theory. It will take years to come to fruition, as factories take a long time to set up, and businesses will need a clearer picture about where the economy is headed before taking on such large investments. On-again, off-again policies delivered in tweets don't provide that - quite the opposite. Moreover, said goods will mostly be more expensive due to higher labor costs, providing little to no relief on the inflation front. It also should be pointed out that successes on this front will reduce tariffs coming in, acting against my previous metric.

    What effect this has on the trade deficit I don't see as important. You run a trade deficit relative to your local grocery store since they don't buy things from you, and what would you do to remedy this? Start a farm? Having invested the time and money in a farm, would you come out ahead? Not likely. The trade deficit is a political football that fiscal conservatives love to complain about, but do not follow up on when they're in power.

    All that said, I emphatically do not agree with the current administration on these policies, or really any policies, just to admit my biases.

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