Tariffs are tricky — not for economists, who tend to view them with an air of clinical (if generally hostile) abstraction, but for voters, who find them complicated. Sure, they raise prices for consumers, and nobody likes that. But tariffs also protect jobs — at least some of the time — and that can be appealing, even to people otherwise distressed by inflation.
The tension between consumption and job security can be sectoral, dividing voters who work in protected industries from those who don’t. It can also be regional: Voters who live where foreign competition has wreaked havoc on employment can view tariffs favorably, even if they don’t work directly for unprotected industries.
The dual identity of American voters — as both consumers and workers — can shape the politics of trade. It also shapes the development of important policies, including tax reform. That was certainly the case in the 19th century when tariff politics slowed the arrival of the modern income tax.
Economists United
Economists are nearly unanimous in their distaste for protective tariffs. Sure, they make room for noneconomic considerations (like national security) that might reasonably justify some import restrictions. But for a profession obsessed with efficiency, tariffs don’t make sense; they raise prices and slow growth, so what’s to like?
Jobs are the answer to that question, of course. Tariffs can create (or at least save) jobs in protected industries. But that answer doesn’t impress most economists because tariffs also cost jobs in unprotected industries. According to a 2019 Federal Reserve study, the tariffs on steel and aluminum that President Trump imposed during his first term produced a net loss in manufacturing jobs (Aaron Flaaen and Justin Pierce, “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Federal Reserve Board Finance and Economics Discussion Series 2019-086 (2019)).
“Tariffs on steel may have led to an increase of roughly 1,000 jobs in steel production,” observed economists Kadee Russ and Lydia Cox in their analysis of the Fed study (Russ and Cox, “Steel Tariffs and U.S. Jobs Revisited,” Econofact, Feb. 6, 2020). “However, increased costs of inputs facing U.S. firms relative to foreign rivals due to the Section 232 tariffs on steel and aluminum likely have resulted in 75,000 fewer manufacturing jobs in firms where steel or aluminum are an input into production.”
Seems like an open and shut case: When a policy eliminates 75 times more jobs than it creates, it’s probably a bad idea.
Not So Fast
But for noneconomists, the bottom line isn’t so obvious. “Tariffs are about more than economic policy,” observed historian Bruce Schulman in a recent piece for Time. “They are also political and rhetorical tools.” (Schulman, “Tariffs Don’t Have to Make Economic Sense to Appeal to Trump Voters,” Time, Oct. 24, 2024.)
Trump seems to understand that fact — and tariff politics more generally. “Dismissing his tariff fixation as bad economics can miss the point and underestimates the political and cultural appeal of such a vision,” Schulman explained.
Among other things, Trump channels the anger that can flow from dispassionate (read: “cold and heartless”) economic analysis. As Gregory Phelan, an economics professor at Williams College, recently observed: “I think it speaks to the point of how elites often say, ‘This move is for everybody’s good, and we can help those adversely affected along the way,’ and then the government doesn’t help those adversely affected along the way. So people are just not interested in listening.” (Aaron Cline Hanbury, “Economists Almost Universally Dislike Tariffs. Why?” Common Good, Jan. 3, 2025.)
That’s a pretty decent summary of tariff politics over the past 40 years or so.
Still, protective tariffs aren’t an obvious political winner, for Trump or anyone else. Voters care about manufacturing jobs. But they also care about inflation — a lot. “What the public says depends on what you ask them,” observed economic historian Douglas Irwin. “If you ask them whether they support tariffs to reduce imports and shift demand to domestic producers, a fair number — perhaps even a majority — will say yes. If you add that this will increase the prices of those goods, support drops considerably.”
Dueling Identities
The problem is structural. Voters are workers, and some of them are even employed in manufacturing industries that would benefit from protection. But voters — including those same manufacturing workers — are also consumers, and they stand to lose from tariff-driven price inflation.
That complexity has been a fixture of tariff politics since Alexander Hamilton engineered the nation’s first tariff law in 1789. But it’s been especially obvious since the mid-19th century, when tariffs reshaped the nation’s political system and helped build a new political party. “For the generations of Republicans who steered the party from the 1860s until the Cold War, tariffs were the glue that held together a political coalition,” wrote Schulman. “Trump has revived that 19th century Republican tradition, once again turning to tariffs as a central unifying principle.”
As a tool for party construction, the tariff worked admirably in the decades after the Civil War. “It cemented disparate state-level organizations into a potent national coalition,” Schulman wrote. “Protection rewarded heavy industry and the regions that supported it: the textile centers of New England, the steel mills and oil refineries of Pennsylvania and Ohio. Special tariff provisions also brought other constituencies, such as Midwestern producers of raw wool, into the Republican fold.”
Some of the industries have changed since those party-building days (although steel is still notably prominent in tariff debates). But the broader political dynamics of 19th century tariffs are still in play. Tariff policies are useful for building unity because they can target important regions and groups. Trump’s ability to degrade the famous “blue wall” of Midwestern states, for example, wasn’t based entirely on his tariff proposals. But trade concerns certainly helped propel his victory in the nation’s historically industrial heartland.
Delaying Income Taxes
As Schulman noted, tariffs helped solidify the growth of the Republican Party in the late 19th century. In the process, however, they also slowed the arrival of an important policy innovation: the modern income tax. In a 2004 article for Labor History, legal historian Ajay K. Mehrotra explained how tariff policies divided the working class and delayed a fiscal revolution.
“Through their unions, working class individuals appeared to be a natural constituency for tax reformers and lawmakers who were seeking to use the income tax not only to revise the tariff, but to build a new fiscal polity,” Mehrotra wrote, “one based primarily on the direct and progressive taxation of income.”
The federal revenue system of the late 19th century placed a heavy burden on people of modest means. Based entirely on indirect consumption taxes — including the tariff and a handful of excises on alcohol and tobacco — the system disproportionately burdened the working class. “As consumers, they were the ultimate taxpayers of the import duties that were passed along by manufacturers and distributors,” Mehrotra wrote. And many workers understood these facts all too well. “Though the tariff, as an indirect consumption tax, operated discreetly as part of the everyday cost of living, the unfair and regressive nature of the tax did not completely escape the notice of many members of the working class.”
But then as now, Americans were more than just consumers. Many were employed by companies that benefited directly from high tariffs. “Protectionism, in fact, provided at least two benefits to many workers,” Mehrotra noted. “It sheltered industries that would not have otherwise existed in the face of foreign competition and thereby provided work; and it also theoretically led to higher wages — a point that pro-tariff Republicans often raised during congressional debates over free trade.”
The dual identity of the working class — as both overburdened consumers and protected workers — obstructed the drive for revenue reform. Workers in protected industries resisted tariff reduction, while those in unprotected industries supported reforms that promised to lower the cost of living.
“For those workers concentrated in the manufacturing belt of the iron and steel industry, for instance, there was little reason to doubt that the protection granted to their industry and employers also benefited them,” Mehrotra explained. “But other representatives of the working class thought that by 1900 the protective tariff had done its job of shielding infant industries; now it only raised the costs of production by imposing duties on imported materials and allowing domestic manufacturers to form industrial combinations.”
In organizational terms, divisions among the working class made it hard for national labor organizations to establish a clear position on tariff reform. Individual unions and local assemblies were often active on the issue, lobbying government and publishing broadsides. But national groups like the Knights of Labor struggled to identify common ground among their disparate members. Thus, these umbrella organizations (including the American Federation of Labor) struck a cautious and generally ambivalent note. National labor leaders understood that tariffs functioned as a regressive tax on consumption. But they also recognized that many individual workers (and local unions) valued the job security (and wage support) that protection could provide.
It was the top labor group in the 1880s, but the Knights of Labor “struggled with a persistent tension between the aims of the national leadership and the activity of local assemblies,” Mehrotra explained. And that tension had consequences. “Division within the labor ranks over the tariff clearly extended the longevity of the nineteenth-century regressive system of indirect national taxation,” he concluded, “forestalling in the process the rise of the income tax regime.”
To be clear, workers eventually played a key role in the arrival of the income tax, but their part in that fiscal revolution was slow to take shape. “It was only after protectionism came under increased scrutiny in the last decades of the nineteenth century that labor organizations were able to suppress their own internal divisions over the tariff and forge a fleeting political alliance with other members of the producing class, namely farmers, to push for a national income tax,” Mehrotra concluded.
Lessons for Today
Nineteenth-century tariff debates can seem distant (and dull). But they help explain some of the puzzling politics that surround modern trade policies. Nowadays, the economic case against tariffs seems compelling, especially since it tends to bridge the partisan divide.
But popular opinion on protectionism is far less united. Divisions among the voting public reflect the same tensions that shaped 19th century fiscal policy, including the arrival of the income tax.
For people who think principally as consumers — almost everyone — tariffs can seem like a very bad idea. But for people employed in industries that face foreign competition, or who live in regions where cheap imports have destroyed a lot of jobs, the job protection afforded by high tariffs can be appealing. That’s true even if, as with Trump’s 2018 steel and aluminum tariffs, the net effect on jobs turns out to be negative.
All politics is local, as former Speaker of the House Thomas P. “Tip” O’Neill famously observed. And when it comes to tariffs, politics can be industry-specific, too.
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