US President Donald Trump’s “liberation day” tariffs have sparked global markets to fall, with trade in services remaining unaffected. The decision to apply tariffs on a country-by-country basis highlights the importance of origin rules, which could lead to severe penalties for mislabeling products.
The stakes are high, as Trump has threatened ten-year jail terms for those attempting to avoid tariffs by changing product origins. This approach mirrors recommendations from AI platforms like ChatGPT and Claude, but economists argue it makes no sense economically.
Trump’s fixation on goods is rooted in nostalgia for a bygone era of manufacturing and concern over job losses among blue-collar workers. However, this nostalgia lacks a logical basis for economic policy. Emotions play a significant role in international affairs, and the “emotional turn” theory recognizes their importance.
Data shows that wages for uneducated Americans have stagnated since 1973, particularly among men, who disproportionately voted for Trump. The service sector has filled the gap left by declining manufacturing, but these jobs are often precarious with low wages and limited opportunities.
Research indicates that trade and globalization are not the primary drivers of job losses, accounting for only a small chunk (around 10%) of declines. Rising productivity is the main cause of manufacturing’s decline, requiring fewer people to produce goods due to automation.
The effects of tariffs will be doubled-edged, potentially shifting some manufacturing back to the US but also leading to higher prices and reduced exports. This could exacerbate job losses in industries reliant on US steel production. Trump’s plan is unlikely to address the underlying issues, as the global economic landscape has changed significantly since the 1950s.
The era of protectionism and tariffs will not recreate a golden age of manufacturing. The world has moved beyond the colonial-era economic system that once dominated international trade.
Source: https://theconversation.com/trump-thinks-tariffs-can-bring-back-the-glory-days-of-us-manufacturing-heres-why-hes-wrong-253991