Tariffs Should Be a Scalpel, Not a Sledgehammer

During the campaign and in the months since the election, President Donald Trump spoke about tariffs—a tax on imports—as a tool to achieve everything from “bringing back” manufacturing jobs to the Midwest to acquiring Greenland. A tariff policy that delivers good jobs and a better quality of life to working families is possible. But it must be thoughtful and work with other policies that prioritize innovation, public health, and sustainability. Under this administration’s current approach, working families risk paying more for goods we need every day while suffering higher levels of pollution.

Tariffs are a tool for compliance and can be effective in enforcing human rights, labor, and environmental protections around the world. For instance, tariffs can make it more expensive for American companies and consumers to purchase goods made in countries that choose to produce goods more cheaply than American competitors because they allow factories to dump their waste in local waterways. A pollution-linked tariff would either nudge factories in a foreign country to compete more fairly by following the same environmental rules or nudge American consumers to buy from American manufacturers who do follow those rules.

Unfettered free trade promoted by U.S. leaders for decades sent our jobs abroad, shed key industries vital to our economic security, and worsened the environment around the world. Carefully applied, tariffs are one way to help rectify these errors.

Recently, former President Joe Biden’s lead trade negotiator announced that her office would investigate Nicaragua’s human and labor rights abuses to determine if the U.S. can put a “Section 301” tariff on Nicaraguan goods. Section 301 of the Trade Act of 1974 lets the U.S. government impose tariffs for production practices and policies in other countries that make trade unfair. In her statement, former Ambassador Katherine Tai said that the Nicaraguan government undermines fair competition by repressing its people. To put it simply, because there is little respect for workers, human rights, and the rule of law, goods can be made more cheaply in Nicaragua than they would be made in countries that abide by high-road standards. While this is the first time Section 301 tariffs have been used in this way, these tariffs could be more widely deployed to address harmful or hostile production practices worldwide. For example, countries with highly toxic and pollution-intensive industries could also be targeted.

While tariffs can be a tool for positive change, they need to be used alongside investments and strong environmental protections in our own country. Together, this could position the U.S. as a leader in modern manufacturing. Additionally, as a significant purchaser of goods, our government can keep those billions circulating in our own economy.

Tariffs can raise the price of imported goods if the companies importing those goods pass the extra cost onto the consumer. Given that corporate profits and CEO compensation are at an all-time high, there is no reason to think importers would pass up an opportunity to increase their margins. So if U.S. producers do not increase output to compete more aggressively against imported products with marked-up prices, consumers will face higher prices. Heightened costs to consumers are more likely when the tariffs target a variety of goods from many countries. With so many working families already facing a cost of living crisis, we have to counter potential price increases by making new investments in manufacturing.

When tariffs encourage domestic production to meet a gap in demand, policies also need to ensure that U.S. manufacturers are held to high standards. Increased production at a facility that is leaking toxic waste into the local water supply will place the community around that factory in greater danger—and allowing a facility with a history of safety violations to increase operations places the workers there at risk. We don’t have to choose between a productive manufacturing sector, clean air and water, and good jobs. Tariffs need to be accompanied by strong commitments that our factories meet high environmental protection standards, worker safety, and other safeguards.

Unfettered free trade promoted by U.S. leaders for decades sent our jobs abroad, shed key industries vital to our economic security, and worsened the environment around the world. Carefully applied, tariffs are one way to help rectify these errors.

But as the Center for American Progress notes, President Trump’s deployment of tariffs as a cudgel—an arbitrarily imposed 10% tariff on Chinese imports and a 25% tariff on imports from Canada and Mexico—would undermine sincere efforts to reform global trade policy to work for working families and fenceline communities. It would instigate tit-for-tat actions from trade partners buying key American products. This kind of retaliation then reduces the market share for American businesses and jeopardizes the stability of our hard-won jobs. Our top three export destinations are Canada, Mexico, and China, the countries Trump targets. Plus, signals from the Trump administration that it will claw back investments in American factories and roll back environmental protections will place the cost of tariffs on the health and pocketbooks of families.

We stand to lose a lot if we build our tariff policy on bluster alone. What we stand to win could change the trajectory of rural America and our economy.