President Donald Trump’s Liberation Day tariff plan and the administration’s actions since have infuriated longtime critics of U.S. trade policies on the political Left—for reasons different from you might assume.
Many of us believe that it is critical that the United States replace our current trade regime, the intensification of which left-leaning organizations and most congressional Democrats opposed in the first instance when fighting approval of the North American Free Trade Agreement, China’s entry into the World Trade Organization, and free trade agreements that followed.
Decades of large U.S. trade deficits have deindustrialized our nation, as economic theory would predict. The United States is now a large country rich in natural resources and talented people that no longer produces many essential goods. As most Americans learned during COVID—and U.S. military analysts warned years earlier—it is not tenable to be so reliant on so few nations for goods necessary for our safety, health, and defense—especially China.
Many on the Left believe that American national resilience and security require us to rebuild more manufacturing capacity.
The sizeable “trade justice” Democratic faction seethes over the loss of 90,000 factories in the last three decades after they could not stop passage of NAFTA, the WTO, and China PNTR. These pacts intensified the damage to working Americans caused by the United States running a trade deficit every year since 1975. They know the deep decline in the number of American manufacturing jobs has been caused by trade policy, not primarily by automation. Their politics are motivated by the urgency of replacing a trade policy that has done devastating and lasting damage to millions of manufacturing workers and their communities, including the fundamental loss of purpose provided by a good job for people who love making things.
Many in this faction understand that today, a small number of mercantilist countries generate huge chronic trade surpluses with the world by employing Beggar-Thy-Neighbor policies—policies that suppress wage levels and/or domestic consumption, create currency-related trade advantages, and provide overwhelming subsidies—to flood the world with overcapacity exports of every imaginable good. China is by far the largest, at almost one trillion dollars in 2024, with Germany second at $270 billion, and Korea, Japan, Taiwan, and others having large chronic surpluses.
The mercantilist countries cause the global trade deficits many nations now face, not profligate spending by the consumers of deficit-running nations, as trade status quo defenders claim. Sixty-seven nations have chronic global deficits, with the United States having by far the largest, at $918 billion in 2024.
No country can enjoy the trade when such distortions undermine normal market function. It is not possible to export our way out of this imbalance given its cause.
This explains why there has been broad agreement that tariffs to counter such import floods are part of the solution. Trump levied tariffs against China in his first term, which reduced U.S. imports from China. President Joe Biden maintained these tariffs and even significantly raised some of Trump’s tariffs in sectors where Congress passed industrial policies, such as the CHIPS and Science Act and the Inflation Reduction Act, to incentivize factory building and stimulate demand for U.S. goods. Even with the flaws in those programs and their implementation, investment in U.S. factory construction reached a 30-year record by the start of 2024. Finally, it seemed there was cross-partisan alignment in support of a new American approach to trade and manufacturing.
But this progress could be undermined by the delivery and substance of Trump’s latest tariff rollout. The tariff plan lacked a coherent strategy. The highest bespoke tariffs did not target the largest contributors to either the global or American trade deficit. Tariffs were not phased in over time to allow U.S. manufacturers and Main Street retailers to shift suppliers. Missing were accompanying industrial policies to translate protection into more production in critical sectors. Outsiders were left trying to explain that the purpose of 10% across-the-board tariffs was to counter transshipment from China and boost U.S. manufacturing overall, including by compensating for the overvalued dollar.
And then abruptly, Trump announced a 90-day pause on some tariffs and negotiations that many fear could result in a wave of bad special interest deals. Economic populists on both sides of the aisle can likely agree that making Japan buy more U.S. LNG, pushing Europe, Australia, and Korea to roll back anti-monopoly enforcement against Big Tech, or forcing more countries to buy genetically-modified U.S. grain exports will not reduce our trade deficit or boost U.S. manufacturing capacity.
And while the post-Liberation-Day market swoons partly reflect a capital “strike” by powerful financial interests opposing any trade system changes, mixed messages about the purpose, duration, and coverage of the tariffs have caused avoidable economic chaos. Uncertainty has chilled the investment in domestic manufacturing that a well-structured tariff strategy could otherwise stimulate.
“All of this threatens to set back an important tool in the trade arsenal as public opinion about tariffs sours and some GOP members join outlier Democrats, who have always supported free trade, in introducing legislation—such as the Grassley-Cantwell bill—to altogether withdraw Sections 301, 232, and other tariff authorities granted to U.S. presidents since the 1970s. This reaction is magnified by powerful interests from the Republican and Democratic parties keen to convince us there is no pathway to America manufacturing more than dollar denominated assets. Financialized, deindustrialized America may not work for a lot of people and communities, but Trade-Team-Status-Quo neoliberals have shifted into hyperdrive to indict critics by associating them with Trump’s actions, which, unfortunately, have provided ample fodder.
Polarized media echo chambers offer Democratic neoliberals a platform to attack fellow Democrats’ ‘nuanced’ takes on why Trump’s tariffs need redirection and how tariffs can achieve desired outcomes, while on the Right, the message is that Trump’s approach is The Art of the Deal, so accept it.
Perhaps most threatening is that recent polls show declining public support for tariffs, even as Trump’s favorability rating have remained largely steady. In October 2024, 56% of Americans were pro-tariff. Last week, while a majority support the goal of rebuilding manufacturing, Trump’s approach was disfavored by 63%. The crosstabs reflect the partisan divides found in all polling these days. But anxiety about the very real economic losses generated by Trump’s chaotic approach, along with GOP messaging that what Trump has offered is the right or only alternative to free trade, contributes to the shift.
So does the Democrats’ relentless focus on the prospect that tariffs will raise the prices. At a time when Americans rate inflation and household expenses as a top concern, this argument is powerful in fueling opposition. But it also ignores the role of wage suppression and forced labor, currency manipulation, and massive subsidization in enabling extremely low-priced imports, which must be countered (and are countered for selective products in dumping and subsidies trade-law cases that Democrats typically support), or there will be no U.S. market for goods produced under fair terms, whether made here or in another country.
The necessary trade transition will have costs. These must be borne the corporations that have profiteered under the old trade regime, not the workers and consumers already hard hit. A recalibrated strategic tariff and trade strategy could reduce costs, but accompanying non-trade policies will also be necessary.
Democrats have rightly focused on how corporate concentration and surveillance pricing has enabled the price gouging and extraordinary corporate profiteering that has fueled high prices and inflation since the COVID crisis. To fight tariff-related price increases, the administration must boost competition policy enforcement, including the Federal Trade Commission using its existing authority to monitor prices and sanction tariff-related price gouging, which occurs when firms raise prices beyond the increase they may experience.
Tariffs are charged on goods’ wholesale price. U.S. companies that choose to import negotiate with foreign manufacturers over who covers what portion of tariff costs. The importing company then decides whether to pass costs to consumers. Major retailers started to advertise “tariff” price increases well before tariffs were even formally announced.
FTC Chair Andrew Ferguson has already said that he will carefully monitor this. Acting to punish firms that are using tariffs as a cover for price gouging would help ease voters’ concerns about tariffs raising retail prices. This includes reopening the FTC’s surveillance pricing investigation that Ferguson recently closed.
Another non-controversial and simple step would be to demand that ‘tropical products’ like coffee, bananas, mangoes, and the like, as well as minerals not found here, be exempted from tariffs. Doing so would avoid adding to the cost of goods we will never produce.
As well, economic populists on the left and right can certainly agree that the ‘tariff relief’ deals the Trump administration is negotiating with dozens of countries must focus on addressing the mercantilist practices that fuel global trade imbalances. But absent transparency, the public will not know whether the national interest or that of Trump’s friends, family, or political contributors is being served.
There are several aspects of the Liberation Day executive order that Democrats could feel comfortable standing behind if they are effectively implemented. That includes plans to close the de minimis loophole, which currently allows four million packages daily, mainly from China, of goods ordered online to skirt tariffs and inspection. Announcing a plan to end to duty-free access for lower-value imports from all countries and ending it for packages from China is an important step. But Trump has flip-flopped on this policy before. Plus, to ensure effective implementation, the administration must require that these packages comply with Custom and Border Patrol’s “Formal Entry” rules, including robust information disclosure to avoid tariff evasion.
It also was smart to exclude Mexico and Canada from new tariffs by keeping USMCA-compliant goods duty-free. This increased the value of sustaining the USMCA and should speed up its required review that starts soon and lead to a much-needed renegotiation. Under USMCA, the U.S. trade deficit with Mexico grew significantly and U.S. job offshoring continues. Among other issues, talks must tighten Rules of Origin designations for traded products, strengthen the deal’s labor and environmental standards and enforcement, and commit the countries to unified trade treatment of China. These changes can tackle Mexico’s continuing wage suppression and Chinese firms’ use of Mexico as a duty-free export platform to the United States. You would not know from the 30% increase in car prices over recent years, but U.S. automakers keep moving production to modern plants in Mexico, where workers can be paid $3 per hour to produce the same models U.S. union workers earn $37 per hour to make. USMCA was Trump’s creation and requires major improvements. There is a redo of the revised NAFTA that would gain broad Democratic support as USMCA did in 2019, but only if it truly fixes the ongoing problems.
And we should consider how rebalancing the global trading order necessitates new monetary policy. While the U.S. dollar’s role as the world reserve currency is not the main cause of our huge global deficit, there seems to be agreement that addressing the overvalued dollar is part of the solution. One approach worth considering is adding a surcharge on foreign investment inflows along the lines of the Competitive Dollar for Jobs and Prosperity Act previously introduced by Sens. Tammy Baldwin (D-Wis.) and Josh Hawley (R- Mo.).
Right and left economic populists agree that workers, not just investors, should gain from trade protection. The offshoring of millions of better-paying union manufacturing jobs means that the “wage premium” for industrial jobs is largely gone. For returns from protection to go towards creating new manufacturing jobs with good wages, workers in new plants must have an easier path to form a union and bargain for their share, and stock buybacks must be forbidden. Instead DOGE is gutting existing domestic and international labor rights enforcement.
An effective bipartisan future is threatened by other administration plans. Trump’s push to end the CHIPS Act and IRA programs without any industrial policy plans to replace them could undermine reindustrialization. So could DOGE’s gutting of the Commerce Department’s Manufacturing Extension Partnership program and reductions across agencies needed to facilitate factory-construction loan guarantees, identify skilled workers recently offshored from manufacturing jobs, and implement stronger Buy American standards and enforcement.
Finally, for properly targeted tariffs to work, prospective investors and firms need much greater certainty than the Trump administration has provided. Congress can help here. It is not impossible that Congress might agree to end China’s Permanent Normal Trade Relations (PNTR) status and raise China’s tariffs. Perhaps Congress might agree to raise tariffs on some key strategic goods to lock new PNTR rates at the WTO. Getting them to do so will require rebuilding bridges in the wake of Trump’s April 2nd announcement.
Are real bipartisan inroads possible after the unforced errors of the initial announcement? Both the Left and the Right recognize a fundamental need for a better trade policy. Let’s hope Trump’s Liberation Day approach hasn’t hurt the cause.
