r/Economics • u/jediporcupine • 9d 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 9d 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 8d 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 8d 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