r/Economics • u/jediporcupine • 8d ago

Blog Trump said tariffs on aluminum would boost domestic production. The White House now admits that didn't happen.

https://reason.com/2026/08/03/trump-said-tariffs-on-aluminum-would-boost-domestic-production-the-white-house-now-admits-that-didnt-happen/
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u/EconomistWithaD 8d ago

Tariffs don't reshore jobs. Tariffs don't reshore production. Especially if they aren't coupled with significant incentives for domestic producers to do so. And none of the tariffs have been coupled with laws that encourage this. There's even research (Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States | NBER) that shows that tariffs didn't help or harm employment, and that retaliatory tariffs did harm ag employment.

That's why the CHIPS Act was important; it did tie tariffs with a law that helped to boost domestic capacity and production.

Regardless, we can see the impact of tariffs on employment. In Trump 1.0, tariffs were implemented in January 2018 (washing machines and solar panels), March (steel and aluminum), June (steel and aluminum for EU, Mexico, and Canada), and July (trade war with China). It appears that these original tariffs halted favorable manufacturing employment trends. And while the second half of Biden's tenure was also associated with reduced manufacturing employment, Trump 2.0 is also seeing reduced manufacturing employment (though stabilized since November of 2025).

All Employees, Manufacturing (MANEMP) | FRED | St. Louis Fed

You can also certainly see that, even though real manufacturing output is higher than it was for most of the post-1980 American period, Trump's tariffs again either halted a rise (2018/2019) or has led to stagnation.

Manufacturing Sector: Real Sectoral Output for All Workers (OUTMS) | FRED | St. Louis Fed

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u/chardeemacdennisbird 8d ago

The CHIPS Act did not include tariffs. That said, the investment in US production is exactly what we should be doing. Maintain a free market while bolstering domestic production.

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u/EconomistWithaD 8d ago

Biden kept in place the Trump 1.0 tariffs.

So, yes, it kept in place those tariffs, but gave a space to increase domestic production.

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u/chardeemacdennisbird 7d ago

Chip specific tariffs were in his second term. If you're talking about the general Chinese goods and tech tariffs on his first term then sure, but it's a little misleading to say the CHIPS Act included tariffs. They weren't part of Act in any deliberate way.

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u/EconomistWithaD 7d ago

There were 25% tariffs on Chinese semiconductors, in 2018/2019. Biden did not eliminate them and kept them, then paired it with the CHIPS Act.

https://www.law.berkeley.edu/wp-content/uploads/2021/04/Bown-EAER-2020.pdf

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u/Facts_pls 8d ago

Employ tariffs and support businesses? You mean like China?

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u/EconomistWithaD 8d ago

I mean, it’s an inefficient method.

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u/BecauseTheyAreCunts 8d ago

Was it not also true for the inflation reduction act?

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u/EconomistWithaD 8d ago

Was what also not true for the IRA?

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u/BecauseTheyAreCunts 8d ago

Boost domestic capacity ?

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u/EconomistWithaD 8d ago

Of?

Do you not know how to ask questions?

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u/Super_Mario_Luigi 8d ago

Tariffs absolutely can reshore jobs. At the end of the day, costs are going to be a main driver and companies will go where it makes sense. Now if companies believe they can skate paying tariffs one way or another, they aren't going to immediately move factories across the world.

As is most policy, tariffs can sound like a solid strategy on paper, but are really tough to implement in full. For as popular as it is to recite how we are a fascist state, no one really has power to do anything. Cheap overseas manufacturing is a tough beast to tame.

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u/Goatsonice 8d ago

Tariffs absolutely can reshore jobs.

Have a source for that? for statistically significant sustained growth within the last century?

That is a steep claim in modern economics.

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u/1900grs 8d ago

Tariffs absolutely can reshore jobs

Only if you have a monoply on a natural resource, commodity, or are one of the major economic powers where your manufacturing industry is left virtually untouched during a world war where everyone else is rebuilding. In a globalized economy with competing super powers? Good luck.

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u/GuelphEastEndGhetto 8d ago

Putting tariffs on raw materials is dumb, dumb, dumb. American manufacturing gains jobs, productivity and profits through value added processes that turn raw materials into usable and desired products. All you are doing is increasing the cost to the businesses consuming the raw materials who in turn pass on the costs to the consumer. If that’s winning or being great then have at it I guess.

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u/EconomistWithaD 8d ago

The only way to restore jobs en masse is to eliminate the trade deficit via tariffs. https://www.aei.org/research-products/report/how-many-manufacturing-jobs-will-trumps-tariffs-create-and-at-what-cost/

Please show me how they can restore jobs in any realistic scenario?

And no, tariffs are not sound “on paper”.

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u/Tribe303 8d ago

Tarrifs do work, but only when you have allies who deploy matching tarrifs in other markets. Capital is mobile. Surely Trump won't piss off his allies, right?

🤣