General
The Cost of Economic Sovereignty
The Cost of Economic Sovereignty
Trump’s tariffs are a necessary correction to decades of economic dependence and the erosion of American industry.
By: Phillip Lede 𝕏 | 04/04/2025
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The day after Trump announced “Liberation Day,” a schedule of sweeping duties levied against America’s trade partners, the stock market bled $3.1 trillion in shareholder value and the Dow plummeted 1,679 points. Today, the market slipped even further, down roughly $9.6 billion since his inauguration. This development has sent a good number of insipid Trump voters, who hedged their support for him on expectations of a bullish stock market and lower bacon prices, into disarray. Republican lawmakers like Rand Paul and Mike Lee pushed back against the slew of duties, and Paul even sided with Senate Democrats to pass a resolution condemning them. Yet, in spite of the market frenzy and ‘conservatarian’ upset, supporters should not be concerned. They are getting what they voted for: a protectionist break from the status quo, and, all things considered, a necessary adjustment to trade policy.
His “reciprocal tariff” scheme stands as maybe the most disruptive rebuke to free trade in the nation’s history, formally casting off the Reaganite marketism that afflicted the GOP for the past half-century. Trump’s plan establishes a baseline tariff at 10%, with higher tariffs being imposed on countries that have exploited America’s liberal naïvety the most. Canada, the UK, and Mexico face a 10% tariff on most goods, the EU 20%, China 54%, among others. Even America’s ‘greatest ally’ of Israel, which Trump has been historically chummy with, was slapped with a 17% tariff, even after dropping all duties on US goods the day prior. While Trump enjoyed tariffs as a bargaining tool throughout his first term and into the inaugural months of his second, his current order poses the fruition of his protectionist convictions in action — as permanent policy.
At worst, Trump’s ‘war on the world’ tariff regime could jettison prices of basic goods (made cheaper abroad), thus spurring inflation and even cascading into a recession. Yet, even given this worst-case scenario, it is for the good of the country that a permanent change be made to America’s economic policy. Trump, it seems, has opted to make this decision sooner than later. Trade policy, as evidenced by modern American history, is not just an accidental affair pertaining to America’s standing among other countries but intimate to the welfare of her native industries. A norm of unquestioned free trade, marking the end of a mercantile America, while first pioneered by FDR’s Reciprocal Trade Agreements Act of 1934, which saw the alteration of duties by the President himself, and the Nixon-backed Trade Act of 1974, which dropped duties in exchange for reciprocal concessions, only came into full force under Reagan, who negotiated NAFTA and signed the liberalizing Trade and Tariff Act of 1984. His participation in GATT, now the World Trade Organization, saw tariffs reduced by roughly 30%. By the end of his term, the US trade deficit had quadrupled from $30.4 billion in 1981 to $123.3 in 1989, due to rising automobile, textile, and tech imports from Japan, Germany, and subsequent outsourcing to nations like China, Mexico, and South Korea.
It was Reagan’s laissez-faire policies that hollowed out America’s once-proud manufacturing titans of the Midwest, landing them the ignominious title of the Rust Belt. Detroit, Chicago, Pittsburgh, and Cleveland, forced to compete on equal terms with the burgeoning industries of the third world, could simply not compete, and millions of American workers fell by the wayside. The labor force of Asia, littered with sweatshops and free from the taxing labor laws of the West, proved appealing for American industrialists. Even while the cost of goods sunk, the lasting effects of free trade decimated America’s heartland, leaving working-class Whites jobless and adrift. America’s liberal trade policies, inherited by Clinton, Bush, and Obama, oversaw the transition of America from a manufacturing economy, which produced its own goods as well as the goods of the world, to an intangible service economy, brimming with gig jobs but increasingly devoid of stable, single-family incomes. From 1970 to 2023, manufacturing plummeted from 31% of the American workforce to under 10%.
Today, roughly 80% of the American workforce is composed of service jobs, from healthcare, finance, retail, IT, to food and education. However, all of America’s service sectors still require manufactured inputs, even if America no longer produces them. Courtesy of free trade, these manufacturing jobs, which supply the American service economy with its lifeblood, are stationed abroad. 60% of semiconductor imports vital to IT hail from South Korea and Taiwan. 80% of pharmaceutical ingredients propping up America’s healthcare industry come from China and India. 25% of steel integral to infrastructure is sourced from abroad, and 50% of its aluminum from Canada. Half of automobile imports hail from countries like Japan and Mexico. 80% of America’s rare earth minerals, found in smartphones to catalytic converters, originate from China. All in all, $3.359 trillion of US goods are imported rather than supplied domestically, and as a result, the trade deficit (the difference between value imported and exported) has ballooned in excess of $1 trillion. In February 2025, it topped $122.7 billion. Even America’s military is dependent on foreign manufacturing for its essential infrastructure, despite efforts to lessen vulnerability in recent years. China’s shipbuilding capacity is so much greater that it can produce 359 ships for every one crafted by the United States. This is to be expected, considering China’s labor pool is five times larger than that of America’s, at 800 million to 165; however, this discrepancy was, prior to Trump, unaccounted for in trade policy. An equal playing field, as astutely recognized by the White House, was and still is suicide for American manufacturing.
It is America’s radical and unhealthy dependence on the manufacture of imported goods that has summoned a mirage of cheap products and speculative gains for Fortune 500 companies while begetting little tangible value for the American worker. A large portion of profits accrued by outsourcing, of course, does not trickle down to workers but is accumulated by firm owners. While costs may marginally rise (from immediate duties on imports), much of the cost of making goods in the United States rather than abroad is absorbed by companies that will have to subtract from their bottom-line profits to allocate among fewer workers. More money is cycled back into the American economy rather than diverted overseas, but more importantly, distributed rather than concentrated. Permanent employment has a greater utility for American workers than the capacity to buy the cheapest possible goods from abroad. Domestic investment, economic independence, and commercial resilience are all indispensable to the sustained welfare of the country, even if disruptive to short-term equity markets. The value of a robust manufacturing base to supply America’s service economy, as well as its vast consumer market, cannot be understated. In spite of what today’s Neo-Keynesian theorists may insist, there is no outgrowing the need for a manufacturing base. The immediate cost of tariffs felt today in the stock market is simply the shock of a long-needed correction, which has been obscured by liberalizing policies so longstanding that they became normal. Trump’s policies are a prudent step towards reclaiming America’s economic sovereignty, even if a final vestige of nationalism from his 2015 campaign. He deserves credit for standing up for the American worker when none of his modern predecessors, Democrat or Republican, were willing to.
His “reciprocal tariff” scheme stands as maybe the most disruptive rebuke to free trade in the nation’s history, formally casting off the Reaganite marketism that afflicted the GOP for the past half-century. Trump’s plan establishes a baseline tariff at 10%, with higher tariffs being imposed on countries that have exploited America’s liberal naïvety the most. Canada, the UK, and Mexico face a 10% tariff on most goods, the EU 20%, China 54%, among others. Even America’s ‘greatest ally’ of Israel, which Trump has been historically chummy with, was slapped with a 17% tariff, even after dropping all duties on US goods the day prior. While Trump enjoyed tariffs as a bargaining tool throughout his first term and into the inaugural months of his second, his current order poses the fruition of his protectionist convictions in action — as permanent policy.
At worst, Trump’s ‘war on the world’ tariff regime could jettison prices of basic goods (made cheaper abroad), thus spurring inflation and even cascading into a recession. Yet, even given this worst-case scenario, it is for the good of the country that a permanent change be made to America’s economic policy. Trump, it seems, has opted to make this decision sooner than later. Trade policy, as evidenced by modern American history, is not just an accidental affair pertaining to America’s standing among other countries but intimate to the welfare of her native industries. A norm of unquestioned free trade, marking the end of a mercantile America, while first pioneered by FDR’s Reciprocal Trade Agreements Act of 1934, which saw the alteration of duties by the President himself, and the Nixon-backed Trade Act of 1974, which dropped duties in exchange for reciprocal concessions, only came into full force under Reagan, who negotiated NAFTA and signed the liberalizing Trade and Tariff Act of 1984. His participation in GATT, now the World Trade Organization, saw tariffs reduced by roughly 30%. By the end of his term, the US trade deficit had quadrupled from $30.4 billion in 1981 to $123.3 in 1989, due to rising automobile, textile, and tech imports from Japan, Germany, and subsequent outsourcing to nations like China, Mexico, and South Korea.
It was Reagan’s laissez-faire policies that hollowed out America’s once-proud manufacturing titans of the Midwest, landing them the ignominious title of the Rust Belt. Detroit, Chicago, Pittsburgh, and Cleveland, forced to compete on equal terms with the burgeoning industries of the third world, could simply not compete, and millions of American workers fell by the wayside. The labor force of Asia, littered with sweatshops and free from the taxing labor laws of the West, proved appealing for American industrialists. Even while the cost of goods sunk, the lasting effects of free trade decimated America’s heartland, leaving working-class Whites jobless and adrift. America’s liberal trade policies, inherited by Clinton, Bush, and Obama, oversaw the transition of America from a manufacturing economy, which produced its own goods as well as the goods of the world, to an intangible service economy, brimming with gig jobs but increasingly devoid of stable, single-family incomes. From 1970 to 2023, manufacturing plummeted from 31% of the American workforce to under 10%.
Today, roughly 80% of the American workforce is composed of service jobs, from healthcare, finance, retail, IT, to food and education. However, all of America’s service sectors still require manufactured inputs, even if America no longer produces them. Courtesy of free trade, these manufacturing jobs, which supply the American service economy with its lifeblood, are stationed abroad. 60% of semiconductor imports vital to IT hail from South Korea and Taiwan. 80% of pharmaceutical ingredients propping up America’s healthcare industry come from China and India. 25% of steel integral to infrastructure is sourced from abroad, and 50% of its aluminum from Canada. Half of automobile imports hail from countries like Japan and Mexico. 80% of America’s rare earth minerals, found in smartphones to catalytic converters, originate from China. All in all, $3.359 trillion of US goods are imported rather than supplied domestically, and as a result, the trade deficit (the difference between value imported and exported) has ballooned in excess of $1 trillion. In February 2025, it topped $122.7 billion. Even America’s military is dependent on foreign manufacturing for its essential infrastructure, despite efforts to lessen vulnerability in recent years. China’s shipbuilding capacity is so much greater that it can produce 359 ships for every one crafted by the United States. This is to be expected, considering China’s labor pool is five times larger than that of America’s, at 800 million to 165; however, this discrepancy was, prior to Trump, unaccounted for in trade policy. An equal playing field, as astutely recognized by the White House, was and still is suicide for American manufacturing.
It is America’s radical and unhealthy dependence on the manufacture of imported goods that has summoned a mirage of cheap products and speculative gains for Fortune 500 companies while begetting little tangible value for the American worker. A large portion of profits accrued by outsourcing, of course, does not trickle down to workers but is accumulated by firm owners. While costs may marginally rise (from immediate duties on imports), much of the cost of making goods in the United States rather than abroad is absorbed by companies that will have to subtract from their bottom-line profits to allocate among fewer workers. More money is cycled back into the American economy rather than diverted overseas, but more importantly, distributed rather than concentrated. Permanent employment has a greater utility for American workers than the capacity to buy the cheapest possible goods from abroad. Domestic investment, economic independence, and commercial resilience are all indispensable to the sustained welfare of the country, even if disruptive to short-term equity markets. The value of a robust manufacturing base to supply America’s service economy, as well as its vast consumer market, cannot be understated. In spite of what today’s Neo-Keynesian theorists may insist, there is no outgrowing the need for a manufacturing base. The immediate cost of tariffs felt today in the stock market is simply the shock of a long-needed correction, which has been obscured by liberalizing policies so longstanding that they became normal. Trump’s policies are a prudent step towards reclaiming America’s economic sovereignty, even if a final vestige of nationalism from his 2015 campaign. He deserves credit for standing up for the American worker when none of his modern predecessors, Democrat or Republican, were willing to.