Hello and welcome to the second post of Talking Points! Tariffs and trade are key elements of Donald Trump’s proposals concerning international relations. Chiefly, he views tariffs, import taxes, as being the solution to the trade deficits that the United States has with other countries. I would argue that these indicate he has a view of trade where in order to win, another must lose. Thus, in order to understand how Donald Trump will have the United States respond, we must understand each of these elements. To do this, we will examine what tariffs are, how they are responded to, how free trade has effected deindustrialization, how free trade has also lead to the development of cross-border supply chains, how such cross-border supply chains have affected the oil industry, and how tariffs will not resolve these issues. Through these examples, I hope to demonstrate that tariffs harm the United States more than they are beneficial

Tariffs, as previously stated are import taxes. Generally speaking, they are an economic tool used by governments in order to encourage domestic manufacturing, by making foreign imports more expensive. For example, let us suggest that the United States wants to boost the American car industry, and views Americans as buying too many Japanese cars. To do so, it places a 20% on all car imports from Japan. This means that an importer in the United States must pay 20% of what they paid for the car, to the US government, in order to receive the car. In order to offset this tax, theoretically, the car becomes more expensive, which means Americans will be more likely to buy the American car, as it has become comparatively cheaper to the Japanese car.

Thus, for a politician like Donald Trump, who became popular largely as a result of deindustrialization, tariffs would seem to be an effective tool to stimulate the American industrial base, which has declined in recent decades. For example, in March 2018, during his first presidency, Donald Trump imposed tariffs on steel imports to the United States, increasing the price of foreign steel. While successfully stimulating the American steel industry, many countries which sell steel to the United States imposed their own tariffs on what the United States sells to them. Demonstrative of this, China placed a 25% tariff on soybean imports from the United States, causing soybean buyers in China to cancel their orders from the United States.

These tariffs, reciprocal tariffs, are standard policy for countries when facing tariffs on their exports. Such a competition is known as a trade war, an economic conflict where a country like the United States, tries to demonstrate to a country like China, that China is more reliant on access to the American market, than the United States is reliant on access to the Chinese market. Because of the economic damage that such trade wars cause, the global community has moved onto free trade, the elimination of such trade barriers, in order to stimulate global economic growth. While such policies have stimulated global economic growth, they have undoubtedly allowed cheap imports into the United States, which is partly responsible for some of the very deindustrialization that Donald Trump was successful running on.

However, free trade has been a double-edged sword for American industry. While it has increased the quantity of foreign imports into the United States, it has also assisted American manufacturing with the popularization of cross-border supply chains within North America. It is crucial to understand that factories do not manufacture finished goods out of whole cloth. For example, while cars might have their manufacturing completed in the United States, the raw materials, parts, and components that have gone into the car, have likely crossed the borders between the United States, Mexico, and Canada, several times. It is these supply chains which have made Canada and Mexico, the United States’ largest and second largest trading partner respectively, with China occupying the third place.

With respect to a particular cross-border good, we can look to crude oil. Canada produces crude oil, chiefly in the province of Alberta. This oil is then transported by pipeline to American refineries, where it is refined into products like gasoline, jet fuel, and products like polypropylene and ethylene, which are the building blocks of plastics. This gasoline, jet fuel, and other products, are both used within the United States and exported, including to Canada. Through this supply chain, the United States is supplied with inexpensive oil from Canada which it sells back to Canada at a profit. Tariffs on Canadian imports, tariffs such as the ones that Trump briefly imposed on Canada in early February 2025, which taxed Canadian oil at 10%, would prove to be disadvantageous for the United States. American refineries would either need to find another supplier for crude oil, or raise their prices by at least 10%.

Despite these advantages, there is no doubt that that many Americans have suffered because deindustrialization, the same deindustrialization that can be attributed to free trade. Higher costs in the United States do mean that American factory workers must be paid higher wages than workers abroad, and thus the decline in American factory jobs. With that being said, I do not think tariffs can reverse these trends. Tariffs may benefit tariffed industries, but they limit American access to foreign markets, while raising costs for American manufacturers. As previously noted, tariffs are reciprocal in nature. Because of this, for every industry that benefits from tariffs on foreign imports, there are industries which suffer from the reciprocal tariffs placed on their exports. Fundamentally, I do not think tariffs actually resolve the issues with American manufacturing, and can cause more problems than they solve.

As such, I think it can be agreed upon that Donald Trump is incorrect in that the United States loses because of its trade deficits and that tariffs are the solution to this trade deficit. While tariffs do benefit the tariffed industry, their reciprocal nature makes it harder for American exporters to sell their products abroad. In particular, tariffs on Canadian and Mexican imports disrupt the cross-border supply chains that American manufacturing benefits from. Furthermore, the United States benefits from imports of Canadian crude oil, which would be made more difficult by tariffs. The United States may buy more in value than it sells, but what it sells, it sells because of complex supply chains. Tariffs make it harder for American manufacturers to buy the raw materials they need to manufacture and to sell the products they manufacture. Therefore, the United States must find a route other than tariffs to alleviate its decline.