There is no economic emergency

I don’t know how many times I’ve heard protectionists defend President Donald Trump’s new tariff regime by bleakly noting that the U.S. economy is a mere husk of its glorious old self. And the only way to save it is by “bringing back” jobs and giving the struggling working class a chance. We have “deindustrialized.” Vice President JD Vance can hardly go a day without spreading this nonsense.

Is our manufacturing base perfect? No, but output is at an all-time high. The United States is the world’s second-largest manufacturer and exporter after China, which has four times the population. Of course, most Chinese workers toil in monotonous, low-paying jobs that Americans no longer need or want.

Only about 17% of the U.S. economy is goods and services imported into the United States. You’re only a slave to globalism in your imagination. The problem is that it amounts to $4 trillion of economic activity every year — around the yearly GDP of Germany.

Now, to convince people that “we don’t make anything anymore,” protectionists focus exclusively on dying Rust Belt towns, a problem deserving of our attention, while completely ignoring the widespread industrial growth and success of the South and West.

We can make anything we want. We choose to buy cheaper goods from elsewhere and use the savings to grow advanced industries, which is one reason we dominate the global economy. Protectionists don’t want you to have that choice.

It is also true, of course, that fewer Americans work in manufacturing than in the past because we are exceptionally productive at making things. Some jobs have been lost to other nations. Modern manufacturing has gone to South Carolina, North Carolina, Tennessee, Utah, Texas, and other states with fewer regulations and job-destroying unions. But many, if not most, of the recent job losses are due to automation technology. Those jobs are never coming back. Though new, fewer, better-paying jobs are created.

I’m sorry, but there is no dynamic economy in which workers do the same things in the same way in the same place forever. If we did, people would still be panning for silver in Tombstone.

Yet, billionaire Commerce Secretary Howard Lutnick contends that Trump’s tariffs will eliminate a foreign “army of millions and millions of human beings screwing in little screws to make iPhones” and bring them to the U.S. Why?

U.S. manufacturers lead the world in capital-intensive, high-skill industries, producing sophisticated products in aerospace, biotechnology, and high-end electronics. We are the world’s leading exporter of food. We don’t need people or machines screwing things together any more than we need linotype operators.

“My God, do you support the sweatshops in Asia?” Yes, “sweatshops” are a massive improvement to starvation. Trade will lift those nations in a couple of generations and create new trading partners.  

Moreover, what if American workers don’t want sweatshop jobs — or even manufacturing jobs? Think tankers and populist politicians seem enthusiastic about a future with millions of obedient workers screwing together phones for minimum wage, but there’s an average of 500,000 open manufacturing jobs in any given month. Less than 8% of manufacturing workers are under age 25.

Protectionists will try to shame critics of protectionism, accusing them of “looking down” on Americans who work with their hands. It’s absurd. There are, and will always be, needs for vocations requiring trade skills, including construction, plumbing, electrical work, carpentry, welding, and repairing and maintaining automation. We have shortages in these fields. We should open career paths to help young people enter those trades rather than incentivize them to obtain useless college degrees.

“OK, but the working class is poorer, and the middle class has been hollowed out.”

This claim is thrown around as an irrefutable truth all the time, even if the middle class is bigger and richer, partly because working-class Americans keep joining it.  

In 1970, around 32% of Americans lived on $35,000 or less (in today’s dollars.) Today, around 23% do. The middle class, those making $35,000-$100,000, dropped from about 54% to about 39% of the working population because the high-income Americans, those making $100,000 or more, grew to 37%. The middle class is shrinking because the upper middle class is growing. Median salaries have consistently gone up.

Still, liberals and protectionists have long claimed that wages are stagnant or falling, ignoring the great material progress we’ve made. It’s difficult for me to believe anyone alive in the 1980s, much less the 1970s, could possibly think a middle-class family in this country is worse off. There is virtually no quantifiable measure in which, in general, they aren’t living better economic lives.

Lots of this success can be attributed to free trade. Whenever someone goes to a Walmart, Target, a German-owned supermarket, or even a local grocery and saves money on an imported good, they build their wealth, spend on something new, and grow the economy at home. If thousands of Americans are screwing together iPhones, consumers pay more, and you’re killing productive jobs elsewhere. In the real world, no one is mad about having more affordable choices. 

Take the shrinking American textile industry. In the late 1960s and early 1970s, the average household spent about 10%-12% of its disposable income on apparel. Today, apparel takes up 2.5%-3% of disposable income — and we buy significantly more. The same formula goes for food. We love romanticizing the past, but most modern middle-class families live like royalty compared to their parents and grandparents.

Of course, no one stops you from buying American-made products if you have a philosophical need to do it.

“America is falling behind.”

I hear this all the time. It’s an appeal to patriotism. I’d point out that there’s nothing patriotic about taking away choices from citizens and making them poorer. However, the argument is also based on a myth.

One way to measure how well a country is doing is to compare its fortunes to the rest of the world. Other than a few small nations, we have the highest GDP per capita in the world. To put it in perspective, West Virginia’s per capita GDP is higher than any major European nation, including Germany. Since 1970, the per capita GDP in the U.S. hasn’t merely outpaced every major economy in the world; it has considerably widened the gap in recent years.

Protectionists like to point out that we’ve lost the share of the world market. So what? This is the kind of zero-sum economic thinking that reminds me of left-wingers who treat wealth as a static pie. The world has been a far richer place since it began rejecting socialism. And that’s good for us.

“We’re being ripped off, David!”

Anecdotally, it seems that people massively overestimate the protectionism of other countries. How many Americans know that before Trump’s trade war, Canada and Mexico effectively had a 0% tariff rate on 95% of U.S. goods? As did Singapore and Switzerland, which are, not incidentally, two of the richest nations in the world. Australia had a 1.8% weighted tariff. Japan was at around 2%. The European Union’s trade-weighted average tariff was 2.7%. Israel removed all tariffs but was still hit with a 10% rate.

Right now, Trump has placed higher tariffs on dozens of countries than they have on us. The cockeyed formula he relies on is predicated on trade deficits rather than weighted rates. I’m not sure how we’re supposed to balance trade with smaller and poorer countries with populations that can’t afford to buy anything we make. If our trade balance ever goes into the black with Cambodia or Albania, we’ll have something serious to worry about.

Then again, so much of the protectionist case for tariffs is based on emotion.

“Why are American streets filled with cars from Europe and Japan, but their streets are empty of American cars?” Trump aide Stephen Miller asked. “Even as we provide defense and security for both?”

Like almost everyone in the administration, Miller vacillates from arguing that the only way to make America great again is self-sufficiency to arguing that we want reciprocation and more globalism. It makes no sense.

Anyway, European streets aren’t empty of American cars. In a bad year in 2024, Ford sold 426,307 vehicles in Europe. Tesla sold 327,635. And Japan had zero tariffs on American cars before the trade war.

Miller also doesn’t mention that German car companies employ about 30,000 Americans, which doesn’t count their suppliers. Honda, which also employs about 30,000 people in the U.S., manufactures nine of the country’s top 15 made-in-America cars (meaning higher percentages of domestic production and assembly). Toyota, which makes the bestselling car in the U.S., employs 48,000 Americans. The Japanese invest about 12 times more in the U.S. than we do in their country.

Speaking of zero-sum economics, perhaps the only establishment protectionists detest more than foreign manufacturers is Wall Street. They function under the childish idea that markets are a single devious entity ceaselessly conceiving ways to screw over hard-working Americans. Some big-name conservative pundits have accused Wall Street of shedding trillions in market value just to undermine Trump. This is paranoia.  

TRUMP’S FIVE MOST ABSURD TARIFFS

In 2024, 62% of Americans owned stock, or about 162 million people. It’s true that most average people’s stocks are in retirement funds. However, about half of private-sector employees work for publicly traded companies. This doesn’t even consider government pensions and downstream businesses that rely on bigger companies to survive. Yes, the stock market always bounces back. But that doesn’t mean there can’t be suffering. As usual, the working and middle class will be hurt the most if there is a recession.

None of this contends that there aren’t serious tribulations in many of our communities: out-of-wedlock births, divorce, drug use, and depression. There are no utopias. Turning economic policy into a social engineering project, however, is a bad idea. Doing it based on a slew of deceptive claims is worse because we are far better off and stronger than the doomers will tell you.