The Tariff Illusion
How protectionist theatre robs the many to reward the few.
Tariffs are one of those bad ideas that simply refuse to die. They promise protection, security, and fairness, but deliver higher prices, inefficiency, and political graft. That they remain politically popular is a testament to how easily people can be persuaded to trade long-term prosperity for the illusion of short-term gain.
Let’s strip away the rhetoric and look at the real motives behind tariff support.
1. Protecting Domestic Industries
The Sales Pitch: Foreign competition will destroy our industries. Tariffs keep them alive and protect jobs.
The Reality: A tariff is just a polite way of saying "We will force you to pay more so an inefficient producer can avoid improving." Every extra dollar you pay to protect one job in steel is a dollar taken from countless other jobs in industries that use steel. The protected industry survives, but downstream industries and consumers bleed.
2. Preserving Strategic Capacity
The Sales Pitch: We need to keep certain industries alive for national security.
The Reality: This argument has a sliver of legitimacy—yes, there are a few truly strategic sectors worth safeguarding. But the "national security" excuse has been used to protect everything from sneakers to sugar. Once an industry is politically protected, it’s nearly impossible to remove the crutch, even when the security rationale collapses.
3. Retaliation and Leverage
The Sales Pitch: Other countries cheat, so we must respond in kind.
The Reality: Trade wars are economic trench warfare—costly, grinding, and strategically pointless. Tariffs rarely make a country change policy; they just provoke retaliation. What starts as leverage ends as a stalemate, with consumers in both countries footing the bill.
4. Government Revenue
The Sales Pitch: Tariffs fund the government without raising income taxes.
The Reality: This was true in the 19th century. Today, tariffs are an absurdly inefficient way to raise revenue, distorting trade and hitting the poorest consumers hardest. If revenue is the goal, there are cleaner, fairer taxes.
5. Political Patronage and Populism
The Sales Pitch: "I’m protecting your job from foreigners."
The Reality: This is political theatre at its most cynical. The beneficiaries—domestic producers—are visible, vocal, and grateful. The losers—millions of consumers paying higher prices—are scattered and silent. Concentrated benefits and diffuse costs: the oldest political scam in the book.
The Economic Law Politicians Won’t Say Out Loud
David Ricardo nailed it in 1817: when countries specialize according to comparative advantage, everyone gains. Tariffs break that law of economics by forcing resources into less productive uses. The result is always the same—less total wealth, fewer total jobs, slower growth.
The Honest Truth
People support tariffs for one of two reasons:
They don’t understand comparative advantage.
They’re in a sector that benefits from making everyone else subsidize them.
That’s it. Everything else is spin. The winners are few and visible. The losers are many and invisible. And politicians, ever attuned to optics, will keep selling this protectionist snake oil for as long as people are willing to buy it.