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President Donald Trump was reelected on a promise to rebuild domestic industry, defend American producers and workers, and rebalance U.S. trade. To achieve these objectives, the president and policymakers in Congress should pursue a robust trade agenda that expands the use of tariffs.
After decades of high-quality jobs and manufacturing moving overseas, Americans recognize that today's trade regime does not deliver the widely shared benefits that its advocates promise. A survey published by American Compass last year found that 47 percent of Americans feel the nation has "suffered" from globalization compared with only 33 percent feeling it has benefited. The respondents also agreed that "we need a stronger manufacturing sector" by a margin of ten to one.
For most of the 20th century, the United States was the world's dominant manufacturer and innovator. But starting in the mid-1970s, the U.S. began to run a trade deficit. This deficit accelerated after the formation of the World Trade Organization (WTO) in 1994, rising from a recent low of $28.6 billion in 1991 to $377 billion in 2001. After China was admitted to the WTO that year, the U.S. trade deficit continued to skyrocket, reaching 918.4 billion in 2024. This represents 78 percent of trade deficits worldwide.
Put simply, the United States now consumes around a trillion dollars more than it produces every year. This is completely unsustainable and puts our economy on a path of instability and decline.
To consume more than we produce, the United States must either pay for the goods on credit or transfer our assets. This means we either borrow money—often through bonds that must be repaid with interest—or sell off assets like stocks, corporate shares, real estate, and intellectual property. Foreigner investors now own more than $23.6 trillion more in U.S. assets than U.S. residents own of foreign nations' assets. So instead of our nation's wealth accumulating to the wider benefit of our citizens, an increasingly larger share is going to foreign entities. These unbalanced foreign investments can also cause asset bubbles like the one that drove the 2007-8 financial crisis and inflate the value of the dollar, making U.S. exports even less competitive.
Our declining trade position has been devastating for U.S. industry and the middle class. From 2000 to 2020, industrial production increased only 7 percent after doubling during the previous 20 years. The U.S. share of global manufacturing dropped from 23 percent in 1990 to 16 percent last year, while China's share rose from 3 percent in 1990 to nearly 32 percent. By 2030, the U.S. share is expected to shrink further, to 11 percent, while China's increases to 45 percent. This trend also extends to trade in advanced technology, which plunged from a U.S. trade surplus of $38 billion in 1991 to a deficit of $299 billion in 2024.
Since 2000, the United States has lost more than four million manufacturing jobs as tens of thousands of U.S. factories shuttered. A recent study found that for Americans without college degrees—who still represent two-thirds of the U.S. population—the remaining jobs were of significantly lower quality. This finding is consistent with data showing median household income largely stagnating after 2000 and the typical male worker now having to work the equivalent of 62 weeks per year (yes, more than 52 weeks) to afford the same middle-class essentials 40 weeks of work would have covered in 1985.
The decline of U.S. manufacturing, driven by "free trade," has devastated thousands of communities across the country, leading to a surge in what Anne Case and Angus Deaton have termed "deaths of despair"—death from suicide, alcohol, and drug abuse. Americans without a college degree now live 8.5 years fewer on average than those with degrees and death rates from drug and alcohol abuse in the United States today are similar to those of post-Soviet Russia. The result has been an unprecedented peacetime decline in overall U.S. life expectancy.
Making things matters. Historically, our greatness as a nation has been synonymous with what we have invented, produced, and built. It was our industrial base, not our dreams of a liberal new world order, that allowed us to emerge victorious in WWII and the Cold War. Consuming floods of cheap imports purchased on credit does not equal prosperity. As Treasury Secretary Scott Bessent recently stated, "Access to cheap goods is not the essence of the American Dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security.... International economic relations that do not work for the American people must be reexamined."
The tariffs President Trump levied under his first administration raised more than $230 billion in revenue while reducing U.S. dependence on tariffed goods and avoiding inflation. Given the persistence of the U.S. trade deficit, President Trump is right to take tariffs to the next level. Whether through a simple global tariff of 10-20 percent—which could raise as much as $2.2 trillion in revenue over ten years—or a wider set of reciprocal tariffs based on our trade balance with each foreign nation, the United States must assert its economic interests against the unfair practices of our trading partners.
While tariffs may bring short-term disruptions and costs, they have even greater long-term benefits. Only 25 percent of U.S. GDP is comprised of traded goods—far lower than the world average of 59 percent. This difference gives the United States leverage over nations that may try to retaliate, and a buffer against wider economic disruption. Domestic businesses will have added incentives to expand industrial capacity, train and employ more citizens, and support wider community development. Facing fewer foreign market distortions, U.S. exports will become more competitive, and more Americans can start acquiring assets rather than selling.
If the United States is to restore its global economic position and the strength of its middle class, we must take a comprehensive approach to fixing our trade deficit and hold our trading partners accountable. If carried out effectively, a new tariff regime could address both specific and systemic barriers that disadvantage our nation's competitiveness in world markets and greatly benefit our economy, industries, and working families.
Mark A. DiPlacido is a policy advisor at American Compass.
The views expressed in this article are the writer's own.
