The new United States President, Donald J. Trump, channels his inner Alexander Hamilton, employing tariffs as an integral instrument of American foreign and economic policy. The sooner everyone starts focusing on the framework the President has been employing and less on the rhetoric, the quicker they can make sense of Trump’s tariffs.
Past Really is Prologue
Alexander Hamilton’s 1791 Report on Manufactures outlined a specific tariff policy. This report is relevant to Trump’s time. Hamilton’s analysis was rooted in prescribing a US foreign economic policy rooted in national interests—precisely how the President looks at economic policy.
Hamilton argued there were three valid reasons for tariffs—raise revenue, national security, and address market imbalances that hurt US manufacturers. To be fair, neither the Congress of the time nor subsequent presidents and legislatures followed his prescription to the letter. Historically, Republicans and Democrats have alternatively defended and decried tariffs. Tariffs have never been an issue of the orthodoxy of major American political parties.
That trend continues today where the parties stood and reflected on their geographical base and business interests. While Trump is attacked for his addiction to tariffs, the Biden administration implemented more duties than President Trump did in his first term.
Arguably, Trump is the closest President in the modern era who doctrinally has sought to fully align his policies with the precepts of Hamilton’s framework for basing economic strategy wholly on the priorities of vital national interests.
Like every instrument of national power, the application of tariffs is an admixture of art and science. Understanding that truism is key to decoding how Trump will employ tariffs in practice.
Here is a primer about how the use of that power might unfold, but in the end, much will depend on the choices Trump makes in applying the art of tariffs to the art of the deal.
The Rules of Tariffs
Rule #1. Prosperity Matters. No one needs to lecture Trump, as many still feel compelled to do that tariffs can harm the economy. The President knows this all too well. People often point out that Trump likes to make deals but never state the equally important corallary—he doesn’t like to make bad deals.
The same can be said about tariffs. The President’s last step is to introduce duties that harm his agenda for driving substantial growth in the American economy—his number one objective in the Oval Office and the number one reason voters put him back there.
So don’t expect Trump to hammer the world with tariffs like Zeus throwing thunderbolts to watch the humans scatter in chaos and fear.
For the President, tariffs are a strategic instrument, and the outcomes must be worth the effort. There is a limit to Trump’s tariff strategy—in the end, he will never let tariffs thwart real growth for American consumers and producers.
Rule #2. Orthodoxy is irrelevant. Many like to portray Trump’s tariff wars as a Manichean struggle between free markets and protectionism. That is not at all how Trump or the vast number of the people who voted for him see it. This debate reflects how the orthodoxy debate gets most of the argument over Trump wrong. Just like conservativism isn’t a debate between internationalists and isolationists, Trump’s economic policy is not after banning Adam Smith or John Adams.
The modern conservative community is not about making deeply ideological choices, especially on policies like tariffs, which are not really deeply ideological. They just want the government to take actions that deliver the best results for them. Voters will judge Trump by the results of his policies—not if he adheres to a political orthodoxy on tariffs. Right now, he has a lot of public support to do what he thinks is best.
Rule #3. More Than One Instrument in the Orchestra. Tariffs are not the only variable impacting economic activity, especially for a country that is one-third dependent on trade. Regulatory policies, energy policies, labor policies, federal spending, and a lot of other issues matter, too.
Predicting the US economy based on tariffs alone is like calling a horse race by pretending there is only one horse in the race.
Rule #4. A Swiss Army Knife is Not a Paring Knife. Critics complain about every proposed tariff discussed by Trump as if they all have exactly the same purpose. We already have evidence aplenty that Trump’s tariff threats cover the spectrum of legitimate uses for duties laid out in Hamilton.
The key to decoding Trump’s tariff policies is figuring out which purpose really underlies his actions. Trump should be graded not by whether he proposes tariffs but by whether they fit one of the three legitimate uses and if they are fit for purpose.
A U.S. $100 dollar bill is seen December 17, 2009.
The blitzkrieg of tariffs from Trump, both threatened and implemented, is far from over. If understanding how they will serve as an instrument of economic and foreign policy is important, then folks ought to be more serious about studying the art and science of how Trump uses tariffs.
Currently, most of the critical tariff analysis is just “orange man bad.”
About the Author: Dr. James Jay Carafano
Dr. James Jay Carafano is a leading expert in national security and foreign policy affairs. Carafano previously served as the Vice President of Heritage Foundation’s Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy and served in the US Army for 25 years. He is an accomplished historian and teacher as well as a prolific writer and researcher. Follow him on X: @JJCarafano.
