Analysis: Lost in tariff translation

On April 2 U.S. President, Donald Trump enacted what he called “Liberation Day” by imposing the most extensive global tariffs the U.S. has seen in over a century. The stock market responded immediately, with the new measures directly contributing to the largest single-day drop and rebound since the 2008 Great Recession. Now, with rising volatility, economists warn of potential recession and inflation.

According to Oxford Economics, tariffs are taxes on imports meant to boost domestic industry. Trump claims they will restore manufacturing and reduce taxes; critics say they will raise prices, damage trade relationships, and ultimately fail to deliver promised gains.

What follows are perspectives from three college professors—one from Harvard Kennedy School and two from Central Oregon Community College—on the potential outcomes.

Economic Perspective

In an April 9 interview regarding the previous week’s tariffs, Robert Lawrence, professor of international trade and investment at Harvard Kennedy School, argued tariffs are more likely to harm everyone than benefit any single country in today’s interconnected global economy.

On inflation Lawrence outlined two probable effects: tariffs could be passed on to American consumers and foreign producers could lower prices to absorb some of the cost. As of May 12 the first outcome has been most evident as Yale’s Budget Lab reported a 1.7% increase in consumer goods prices—an average loss of $2,800 in annual purchasing power per household.

Lawrence said, “it’s important to point out that people, as they get richer, spend less and less on goods and more on services…tariffs have a regressive incidence because they take much more out of the pockets of poor Americans than they do of rich Americans.”

If President Trump’s next round of proposed tax cuts mimic those of his first term—offering only modest or temporary relief to low and middle-income households—the additional money saved on paychecks is unlikely to offset the extra money spent on products by the typical household.

On the trade deficit Lawrence said the U.S. buys more than it sells not because of unfair trade, but because of how Americans spend. In this case Americans make the sacrifice of having manufacturing jobs and production take place in their country to have greater purchasing power of goods from other countries.

He said this deficit is like a loan: “as long as we borrow the money and use it productively to increase investment in the United States, it is eminently sustainable, as with any investment.”
Using this benchmark, the U.S. has made good on their loan. During the past 40 years of deficits Americans earned equal to or more from investments made abroad than foreigners earned from investments in the U.S.

Historical Perspective

As per Murray Godfrey, professor of history at COCC, there are two main arguments behind tariffs: raising the price of goods in the American market will make producing and investing in the U.S. more enticing, and any kind of trade or tariff imbalance between countries is fundamentally wrong.

Godfrey identified the 1950s and 1960s as the last period when the U.S. met both goals—it maintained about 30% of its workforce in manufacturing while it exported more goods than it imported.

He cautioned against romanticizing that era, however, stating, “the appeal of the tariffs is that we can bring back a world that never was. Those manufacturing jobs were abusive, offered low wages, and were often seasonal.”

He also noted that shifting expensive production back to the U.S. came with trade-offs, like lower product quality and fewer modern conveniences. Cars frequently broke down and full kitchens were uncommon luxuries.

Godfrey explained, “the reason we no longer have that nostalgic economy isn’t because we stopped using tariffs but because technology changed.”

Regardless of globalization, advancements in manufacturing efficiency have made job losses in the sector permanent and inevitable. He indicated that trade imbalances are also less about tariffs and more about other factors—namely differences in purchasing power. For example, it is unrealistic to expect Vietnam, where GDP per capita is roughly one-tenth that of the U.S., to import as much from America as Americans do from Vietnam.

Several historical factors contributed to the U.S. moving away from tariffs. Firstly, in the 19th century tariffs were the federal government’s primary source of revenue. However, growing criticism pointed to the system’s vulnerability to corruption, as presidents could be bribed or pressured to raise or lower tariffs for specific industries.

This led to a shift toward a more equitable and fixed income tax system. Secondly, after World War II economists increasingly viewed trade wars as contributing factors to global conflict and the U.S. has since used tariffs sparingly—typically to protect specific industries rather than as a broad economic strategy.

Godfrey said tariffs require a decade to be effective and backlash often derails them within two years. “The consensus of the economic history of tariffs is that they never did help,” he said, and added that even if Trump maintains support, any gains may be undone by the next administration.

Sociological Perspective

According to Ken Ruettgers, professor of sociology at COCC, the poor—at times absent—communication about the goals and rollout of tariffs has intensified public tension by creating uncertainty that has prompted many Americans to assume the worst.
Ruettgers explained, “in the midst of all this confusion, Americans are being asked to consider some critical questions: how much certainty and reliability should we place in our government? And how much should we be self-reliant and actively involved in shaping policies that foster a healthier relationship with it?”

He observed that in the absence of clear context, public opinions often default to partisan positions. Democrats supported tariffs under previous administrations, yet many now oppose them because of who is implementing them. This shift, he said, raises a deeper concern to each individual: “do our political affiliations shape our views more than the actual content of policies? And are we more loyal to consistent principles or to the parties we support?”

Ruettgers noted that despite widespread public frustration—some of it driven by strict political affiliation—there may be rational justifications for the tariffs that have not been effectively communicated.

For example, after World War II the U.S. assumed the costly role of safeguarding global free trade through its military presence abroad, but shrinking resources and aging foreign labor forces made this role harder to maintain. He explained that as a result a shift toward a more self-sufficient domestic economy may represent a safer and more viable long-term alternative.

Ruettgers determined that because the current political system is heavily influenced by public opinion, implausible claims—such as tariffs replacing income tax in the future—are unlikely to sustain lasting support.
He concluded that as public skepticism grows, the likelihood increases that the tariff initiative will be abandoned before achieving its intended goals.