How Tariffs Are Breaking the Manufacturing Industries Trump Says He Wants To Protect

When President Donald Trump announced a sweeping set of tariffs on nearly all imports, he promised that April 2—what the White House dubbed "Liberation Day"—would "forever be remembered as the day American industry was reborn."

That's not the way Michele Derrigo-Barnes sees it. Trump's tariffs are "killing" small American manufacturers like hers, she tells Reason.

As CEO of Plattco Corporation, a small business that makes industrial valves, Derrigo-Barnes runs the sort of blue-collar industrial production shop that Trump and his allies say they want to help. Instead of being helped, she found herself dealing with fallout from the tariff announcement: canceled orders, higher prices, and enough uncertainty to put on hold a planned expansion of the company's Plattsburgh, New York, manufacturing center on the banks of Lake Champlain.

What would she tell Trump if she got the chance? "Stop the nonsense. We've worked hard to get us to a place where we can perform well and we can take care of our customers, and this is putting that in jeopardy."

The few dozen workers at Derrigo-Barnes' company won't be the only ones in jeopardy if Trump's tariffs remain in place for the long haul. Hundreds of thousands of manufacturing jobs will be lost and only about a fifth as many created, according to an estimate by investment bank Goldman Sachs. Tariffs create higher prices for inputs, which in turn can reduce sales for manufacturers' outputs, leaving companies worse off. While large companies such as Apple have already successfully lobbied the White House for special treatment, smaller operations such as Plattco have little choice but to eat the costs or pass them along to consumers.

The gap between Trump's and Derrigo-Barnes' understanding of how tariffs affect American businesses is even larger than the gap between D.C. and Lake Champlain. Trump's global trade war has illustrated the folly of central planning, even when carried out by supposed populists who claim to be guided by the best interests of working-class Americans. It has revealed how little the president understands about the economy that he believes he can control, and how his protectionist impulses are hurting the very industries he claims to be helping.

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In an interview with Time to mark his first 100 days back in the Oval Office, the president offered a telling illustration of how he views the American economy.

"We're a department store, a giant department store, the biggest department store in history," Trump said. "Everyone wants to come in and take from us. They're going to come in and they're going to pay a price for taking our treasure, taking our jobs."

There are so, so, so many things wrong with this analogy. America does not resemble a department store. The 170 million people in the U.S. labor force are not the president's employees. It is not the president's job to set prices or decide what can be bought and sold.

But an even more telling and terrible analogy is hidden inside that bizarre conception of how the economy works. Trump seems to be suggesting a successful department store would be one that raises prices without regard for the consequences on its employees or customers. In his version, a store that makes a lot of sales is giving away its "treasure."

Walmart did not become the world's largest retailer by trying to punish its customers or limit sales. The people who run successful businesses understand something that Trump does not: Voluntary trade is a mutually beneficial arrangement. That's true regardless of whether the deal is between a store and its customers or a factory and its suppliers. It's also true even if one of the traders is located abroad.

Trump will fail as the country's department store manager in chief for the same reasons that central planners always fail. It's simply impossible for the White House to understand and manage trillions of dollars in cross-border trade more efficiently than individuals and businesses do. Trump certainly has no clue what equipment the Plattco Corporation needs to build its annual supply of valves, to say nothing of the millions of other transactions that are essential to building cars, appliances, and other gadgets at factories all over America.

In many cases, those transactions involve items that can't be sourced domestically. "Whether it is coffee, bananas, cocoa, minerals or numerous other products, the reality is certain things just can't be produced in the United States," Suzanne P. Clark, president and CEO of the U.S. Chamber of Commerce, explained in a statement released in late April, as the organization was urging the White House to grant tariff exemptions for small businesses. "Raising prices on those products will only hurt families struggling to pay their bills."

Trump may fail for new reasons too. The White House has spent weeks pivoting between the claim that tariffs will allow the federal government to collect trillions of dollars in new revenue and the claim they are a negotiating tool to be removed once the other countries have knuckled under. Both cannot be true at once.

There is also an alarming lack of forethought on display. The day the "reciprocal" tariffs were meant to take effect, one week after they were first announced, Trump suddenly announced a three-month pause in their implementation. That decision, according to The Wall Street Journal, was made after Treasury Secretary Scott Bessent cornered Trump while tariff-crazy trade adviser Peter Navarro was temporarily indisposed.

Economic data suggest the tariffs are already discouraging investment and slowing imports. Higher prices and supply shortages loom on the horizon. For businesses that depend on imports, the chaos and uncertainty are creating huge headaches.

Victor Owen Schwartz, the owner of VOS Sections, a New York–based importer and distributor of wines and spirits, says the tariffs have made it impossible for him to plan ahead. (He is also a plaintiff in a lawsuit filed in April that challenges the administration's authority to impose tariffs without congressional approval.)

"Could you imagine if I had a supplier and every time I talk to them, they gave me a different price?" he told Reason in an April interview. "This is the equivalent of that."

And that's no way to run a department store—or a country.

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International trade is essential to American manufacturers like Plattco, whose industrial airlock valves are used by other blue-collar industries, such as mining and shipping operations. About half of the company's 55 employees work in the plant, explains Derrigo-Barnes, while the rest handle sales and overhead.

The products they sell are convenient metaphors for a large swath of American manufacturing in the third decade of the 21st century: advanced pieces of engineering that link other equipment, all working seamlessly to allow the efficient transfer of goods from place to place.

Plattco's valves themselves contain dozens of different parts: a body, an arm, a cover, a seat, a flapper, air cylinders, ball bearings, a shaft, bearings and bearing screws, air hoses, a plug, a rod end, more screws, pins, a link, gaskets, washers, and more. Many of those parts are manufactured abroad, and the final product is assembled at the company's facility in Plattsburgh.

"We do not have the space, the machinery, or the people to be able to meet all of our demand," Derrigo-Barnes explains. Imports help fill the gap, so Plattco can sell more than what it produces domestically. Those extra sales benefit the company's bottom line, pay salaries, and allow more customers to get what they need for their own businesses.

"The only way we would be able to make everything in-house would be millions of dollars of investments, which would take us years and a lot of money," she says. "I understand the philosophy that we want to have everything American-made, but it's not something that anybody is going to be able to just pick up and do tomorrow."

The same is true of America's manufacturing economy as a whole. More than half the imports to the U.S. are raw materials, intermediate parts, or equipment—the stuff that manufacturing firms need to make things—rather than finished goods.

Those imports are essential to American manufacturers—which are flourishing, despite the narrative of doom and decline that many politicians have been pushing. Domestic manufacturing output is higher today than it was in 1994 (when the North American Free Trade Agreement was signed) and higher than it was in 2001 (when China joined the World Trade Organization). Meanwhile, average wages for manufacturing workers (excluding managers) have doubled since 1999, outpacing inflation.

It's true that manufacturing employment has declined in recent decades. In fact, the decline isn't even all that recent—the raw number of U.S. manufacturing jobs dropped steadily from the late 1970s through the early 2010s, due to a combination of factors including automation, outsourcing, and the simple fact that fewer Americans want factory jobs when higher paying, less backbreaking work is available. The number of manufacturing jobs has been increasing over the past decade, but tariff advocates don't want to talk about that either.

Higher tariffs on raw materials and component parts will put all of those positive trends at risk.

The "reciprocal" tariffs that Trump unveiled on April 2 would, if they're fully implemented, reduce the economy by about 0.8 percent and cost an estimated 671,000 jobs, according to an analysis by the Tax Foundation. A constant flurry of changes, pauses, and exemptions makes the damage hard to predict, though. They may have been amended, postponed, reimplemented, reconfigured, or canceled entirely by the time you are reading this—it is impossible to know what the White House will decide on a whim.

In its April survey of manufacturers, the New York Federal Reserve reported "a level of pessimism that has only occurred a handful of times in the history of the survey." In the section of the report dealing with what the Federal Reserve calls "forward-looking indicators"—that is, what businesses expect the next six months to look like—the results were particularly grim. Manufacturers expected to see fewer orders, longer delivery times, declining inventories, and lower levels of employment. About the only lines pointed upward were their expectations for prices, which tariffs will inflate.

In a separate survey of manufacturers by the Institute for Supply Management, responses to the tariffs were overwhelmingly negative. "Tariff whiplash is causing us major issues with customers," including fewer orders, one machinery firm reported. (Businesses that respond to the survey are kept anonymous.) "There is a lot of concern about the inflationary impacts from tariffs in our industry. Domestic producers are charging more for everything because they can," said a fabricated metal producer. Overall, the institute concluded that "demand and production retreated and destaffing continued, as panelists' companies responded to an unknown economic environment."

Looking ahead, Trump's tariffs will increase American manufacturers' costs by 5 percent to 15 percent, an April analysis by Goldman Sachs concluded. As supply chains shift in response, American manufacturers could add about 100,000 jobs, the same study found—but those gains would be swamped by an estimated 500,000 jobs lost in other industries due to higher costs throughout the supply chain.

By mid-April, those job losses were already starting. Mack Trucks, a century-old Pennsylvania-based manufacturer of big rigs and other heavy-duty vehicles, announced plans for up to 350 layoffs. A company spokesperson said the decision was driven by "market uncertainty about freight rates and demand" and "the impact of tariffs."

The outcry from manufacturers inverts the traditional model for understanding how protectionist policies get enacted. Historically, tariffs would be sought by domestic producers who want protection from foreign competition.

What's happening now is different. Trump is forcing his tariffs on American companies that, by and large, were not asking for them, do not want them, and are now begging the White House for exemptions from them.

"Many manufacturers in the United States already operate with thin margins," Jay Timmons, head of the National Association of Manufacturers, noted in a statement about Trump's tariff announcement. "The high costs of new tariffs threaten investment, jobs, supply chains and, in turn, America's ability to outcompete other nations and lead as the preeminent manufacturing superpower."

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Trump does not seem to be listening. Asked in that same Time interview whether he'd be pleased if tariff rates of 20 percent or more lasted for five years or longer, the president said he would consider that outcome a "total victory."

Perhaps Trump should have tried running a department store or a factory before deciding he could centrally plan the entire economy from the Oval Office.

Amid the shifting, contradictory justifications for the trade war emanating from the White House, bear in mind that Trump's fantastical beliefs about tariffs are deeply held. He will be one of the last people in the country to accept reality, long after rising prices, slower growth, increased job losses, and a sagging stock market have convinced the rest of America that high tariffs are a mistake.

Trump's tariffs, like all policies, must be judged by their results and not their intentions. The president is not guiding a rebirth of American industry. He is overseeing a ritual sacrifice to the false god of central planning.