How the Trump Administration's Use of Trade Sanctions Can Harm the States

Abstract

The administration of President Donald J. Trump has promised to aggressively impose trade sanctions in the form of higher tariffs on imports from nations that engage in unfair trade practices against the United States. Trump argues that increased tariffs will help the states that have suffered losses from international trade and was able to propel himself to victory in the 2016 presidential election based at least in part on these claims. However, tariffs are a blunt instrument and ill-suited to achieve domestic policy goals. Imposing higher tariffs on imports can actually harm the states because (1) U.S. trading partners might impose retaliatory tariffs on U.S. imports; (2) states may rely on imports as raw materials for use in manufacturing exports; and (3) jobs lost to overseas locations will not return to the United States and more job losses may result. As the states cannot evade the harmful effects of federal trade sanctions on their own, there is the need for a federal-state consultative mechanism through which the states can provide input to the federal government. With input from the states, the federal government can adjust federal policies to mitigate the unpredictable harms that the states may suffer as a result of those policies.