The success of President Trump’s tariff policies continues to silence the skeptics and exceed the expectations of even his staunchest supporters.
Not only is revenue skyrocketing (projections for 2025 are at around $300 billion) while prices remain mostly steady, but tariffs have also become a major driver of foreign direct investment.
When Trump rolled out his “Liberation Day” tariffs in April, the media mocked him for basing each country’s rate on its trade surplus with the United States. It was only later, when Trump started inking new trade deals, that the genius of this approach became clear.
High tariff rates serve as a starting point for negotiations. If our foreign trading partners aren’t happy with those rates, they can “buy down” their tariffs by building factories in America, especially for critical industries.
“We have agreements in place where the Japanese, the Koreans, and to some extent the Europeans will invest in companies and industries that we direct—largely at the President’s discretion,” Bessent explained in a Fox Business interview last week. “Other countries, in essence, are providing us with a sovereign wealth fund.”
So far, this strategy has secured trillions of dollars in promised investment to help reindustrialize America. That means more robust supply chains, a stronger defense-industrial base, and more good-paying jobs for high school grads in flyover country — the forgotten men and women who put Trump in office twice.
Former President Joe Biden took a few admirable steps in this direction. His CHIPs and Science Act, for example, convinced the Taiwan Semiconductor Manufacturing Corporation to spend $65 billion building fabrication plants in Arizona.
The bill was full of DEI deadweight, but Biden deserves credit for reshoring an industry that’s critical to both our national security and our ability to compete in the AI race.
These new fabs have also disproved one of the major arguments against industrial policy.
Most economists argue that industries move overseas because of “comparative advantage.” Each country, the theory goes, will specialize in doing what they’re best at. By this logic, if Taiwan makes most of the world’s semiconductors, it must be because they’re so much better at it than everyone else.
Turns out, that’s not true. Within two months of starting production, the Arizona fabs had production yields four percent higher than their Taiwanese counterparts. American workers are ready to compete. They just need leaders in Washington who will give them a fighting chance.
Unfortunately, Joe Biden was not that leader. He selectively applied tariffs on certain countries and products but lacked the imagination to make a hard break with the dead neoliberal consensus. In one campaign speech, he warned that “across-the-board tariffs on all imports from all countries … could badly hurt American consumers.” When Vice President Harris took over, she stuck to the same message.
Meanwhile, the Biden administration was actively undermining some of America’s most successful companies, often for political reasons.
It redirected federal contracting dollars on the basis of skin color rather than merit.
Its financial regulators tried to force companies to stack their boards with DEI hires.
Its Justice Department launched a nakedly political lawsuit against Elon Musk’s SpaceX.
And its antitrust enforcers even went after Visa, one of the most important players in America’s financial infrastructure. The DOJ claimed Visa’s extremely nominal debit card swipe fees drive up prices through the company’s alleged monopoly, but the case was really about shifting blame for inflation away from Biden’s own failures.
Federal law already requires that every debit card function on two or more networks, which makes the idea of Visa “monopolizing” the market incoherent. By targeting Visa, Biden wasn’t protecting consumers, he was blame-shifting inflation onto an unpopular private company, which, on the campaign trail and in press releases, he regularly accused of raising the price of nearly everything.
This was the same playbook Biden used against SpaceX: weaponize antitrust and regulation to protect his political interests and undermine his political enemies.
Trump, by contrast, has made it clear that America’s financial networks, industrial base, and technology leaders are assets to be strengthened, not scapegoats to be attacked.
Now that the true power of Trump’s tariffs is clear, there’s no going back. No future president will be content to sit idly by while rigged foreign trade policies drain our country’s physical, intellectual, and social capital. Voters will demand that their chief executive, whether he’s a Republican or a Democrat, get out there and deliver wins for the U.S. economy.
So far, that’s exactly what Trump has been doing. Democrats can either pooh-pooh these achievements or promise to exceed them. If they choose the first approach —dismissing Trump’s tariff success while cheerleading Biden’s failed crusades against innocent companies like SpaceX and Visa — then I look forward to congratulating the next Republican presidential candidate on his or her 40-state landslide.
James P. Moran is a Florida-based economist. He is a professor emeritus of economics and former department chair at Russell Sage College.