America’s Great Leap Backward
Trump’s tariff policy is following years of bipartisan support for manufacturing jobs. The reality of bringing those jobs back will be much different.
I hope you’ve spent the weekend brushing up on your fine motor skills.
Commerce Secretary Howard Lutnick, who is in charge of the current five-year plan, this week addressed concerns that an effective 50% tariff on imports from China, our largest high-tech manufacturing partner, would raise costs on consumers and cripple the economy by saying that Americans will be happy once we bring those manufacturing jobs to America.
Now I don’t know about you, but I’m not a super huge fan of assembling my own iPhone. Nor am I particularly enthused about a career in a job that literally involved nets to prevent people from jumping to their deaths. But Howard Lutnick is, as is Donald Trump and the entire administration.
There is a lot to the tariff policy, and no one goal. Donald Trump is an economic buffoon who prior to becoming president was a caricature of a rich businessman. He has argued for decades that America was getting screwed by countries with large trade imbalances. I’m not going to get into the details of trade “deficits” and how they are a complete non-issue, I’ll leave that to other great resources like Cato and AEI. But it’s clear that Trump believes in tariffs and always has. Tariffs also give Trump massive power in the economy, requiring other countries and companies to come to him and beg for exemptions. There was a time when Republicans would see government interference in the economy as a negative, but today it’s seen as the default and obvious choice to have one man deciding what Americans should eat, buy, and manufacture.
One of the biggest tariff goals, though, is to “create American jobs.” And this is a tough one, because it transcends partisanship. Left-wing politicians long argued against big free trade deals, from NAFTA to TPP, on the basis that other countries would “steal” American manufacturing jobs. That frustration helped led to the election of Barack Obama, who opposed NAFTA in 2008 but like many progressives found the light on free trade when they actually had to build and maintain a strong economy. That switch, and Clinton’s perceived openness to free trade agreements, helped narrowly elect Donald Trump the first time. The “hollowing out of American manufacturing” is a constant theme in election campaigns for literally as long as I’ve been alive. It should be no surprise that a true believer like Trump will win the voting base that believes America doesn’t manufacture anything anymore.
The reality is different, however. America manufactures a lot. Cars, housing, appliances, furniture, medical supplies, weapons - heck, we are GREAT at weapons, like that’s kinda our thing! What we have lost are lower cost, commodity items that tend to be lower revenue and have lower paying, low-skilled manufacturing jobs associated. American manufacturing is expensive, largely because despite the common image of America, we are a high-wage, high-income economy. Part of the political fetishization of manufacturing jobs is the fact that kids coming out of school can get a factory job and make a middle-class income, in many cases much higher than what someone leaving college with a bachelor’s degree would be making.
Side note: That’s a false belief. While it’s true at the entry level, we know that American with college degrees make much more over a lifetime than those without, and manufacturing and labor jobs are hard work. The refrain being told to high schoolers that “you can just go into the trades and make more money than going to college” is frankly really detrimental to kids and our society as a whole, and shouldn’t be seen as a binary choice. The soft skills you learn in higher education are just as important in the trades as hard skills, and result in more successful tradesmen and careers.
What is the end result of a Trump industrialization policy? Put aside all of the other negative aspects of this week’s tariff announcement. If Trump succeeds at bringing widespread, low-skilled manufacturing back to the country, who benefits? The administration would tell you Americans would, and they should suffer through the pain to get these jobs back. But in a time of low unemployment, who will work them? We are making legal and illegal immigration here almost impossible. Much of the low-wage jobs, like slaughterhouses and meat processing, is already done using immigrant labor of various legality. So with less immigration to the U.S., those jobs will have to be filled as well as these new manufacturing jobs.
The answer is obvious: the Americans currently working higher-wage, higher-skilled service jobs. Given the administration’s continuous destruction of higher education, and the forced decoupling of the other western democracies from the United States, it seems clear that there is a future where instead of being a high-wage, highly educated service industry country - long taught as a goal of developed nations to achieve better economic outcomes and standards of living for their people - we will go backwards to a middle-power, middle-income manufacturing nation.
So better sharpen those repetitive motor skills this weekend. The factory with all the nets around the buildings will be hiring soon.
Do you feel liberated yet?