Rethinking Tariffs Through the Lens of Productivity
I recently had an engaging conversation with a friend about the U.S. economy—specifically about tariffs and their potential effects on both the national economy and individual households. My friend argued that tariffs would drive manufacturing back to the U.S., since importing goods would become more expensive. There's a kernel of truth in that: tariffs can make offshoring less attractive. But this view often overlooks the higher costs associated with domestic production , including building new facilities and paying U.S. wages. These increased costs may ultimately raise the prices of goods and services, fueling inflation. There’s no question that certain strategically vital goods—such as those tied to national defense—should be manufactured domestically. Still, producing these goods on U.S. soil often comes with a price premium, which could lead to higher government spending and, possibly, higher taxes. The conversation then shifted to immigration. My friend suggested that ...