Last week, the Cato Institute released a national survey of 2,000 Americans conducted by YouGov about trade and trade-related issues. Michael Strain and Dominic Pino have each reported on the main findings.
Pino rightly notes that most Americans don’t really have strong opinions about trade. According to the survey, “only 1% of surveyed Americans said that globalization and international trade was a top-three issue for them, the lowest for any issue asked about on the survey.”
Meanwhile, Strain reports that 66 percent of Americans say that global trade is good for the U.S. economy, and 58 percent say it has helped raise their standard of living. He also notes that 63 percent of the public favors an increase in U.S. trade.
However, the point I want to highlight about the poll is that Americans don’t like higher prices, even if that means more manufacturing, more jobs, or made-in-America products. For instance, in theory they support tariffs (though as Pino reports, “47 percent said neither or haven’t heard of them”) as long as tariffs don’t really increase the prices consumers pay for products. From the poll:
Likely for these reasons, Americans are sympathetic to imposing tariffs on some imports. For instance, 62% would favor adding a tariff to imported blue jeans to boost production and employment in the domestic blue jean industry. However, when faced with the possibility that such a tariff makes a pair of blue jeans $10 more expensive, a strong majority (66%) of Americans oppose adding such a tariff. And even more would oppose blue jean tariffs if they caused the price of jeans to increase $25 per pair of jeans (81% oppose) or $50 more per pair (87% opposed).
Also, while Americans would prefer to buy American-made products (whatever that means, considering that something labeled “made in America” is often made of many non-American parts), their preference goes away if it must be paid for with a price premium:
If all else were equal, a majority (75%) of Americans prefer to buy American-made products. Part of the reason is that most (55%) trust American-made products more than foreign-made products. However, if they were confident the quality would be the same, a slim majority of Americans (51%) would rather buy a less expensive product made abroad. Thus, a large share of Americans abandon their preferences for domestically produced goods as soon as a better price becomes available. For instance, 7 out of 10 Americans would not pay even $10 more for an American-made frying pan. Further, although the public says they prefer American-made products, 76% did not purposefully buy an American-made product in the past week.
Additionally, support for tariffs also dropped significantly when people are exposed to the fact that foreign countries will retaliate. In that scenario, 51 percent of respondents opposed tariffs.
In other words, the current narrative from the right (supported on the left since President Biden has pretty much maintained President Trump’s trade policies), that tariffs are going to save us from evils such as China, declining manufacturing employment, and trade deficits, will fall on deaf ears to the extent that Americans realize that trade restrictions inevitably increase families’ cost of living.
U.S. tariffs are taxes on Americans’ purchases of imported goods. When a tariff is imposed, it directly increases the cost of the imported product — a cost the bulk of which is passed on to consumers in the form of higher prices. Considering that at least 50 percent of imported goods are raw materials or intermediate goods, tariffs will likely increase production costs for domestic manufacturers. And these costs, too, are of course passed on to consumers. Also, numerous economic studies have shown a correlation between tariff implementation and price increases. For example, studies on the 2018–19 U.S.–China trade war found that American consumers bore much of the cost of the tariffs through higher prices.
In this piece, I argue that there are better ways than tariffs to help the manufacturing industry. Considering the impact of tariffs on prices, the fact that Americans really don’t like higher prices, and tariffs’ inability to do what their advocates claim they will do for the country, I find it strange how central to the New Right agenda they have become.