What Could Progressive Tariffs Actually Look Like?

Free trade critics on the left fought a lonely battle against a powerful bipartisan consensus for decades, trying to convince the U.S. political mainstream that tariffs could be used as a tool to restore American industry, help American workers, and set global labor and environmental standards.

Tariffs came back into action during Donald Trump’s first term and under Joe Biden. Trump tried to use the tariffs as leverage for a trade deal with China that produced few results. Biden sought to marry tariffs on Chinese goods with an industrial policy aimed at growing domestic capacity in sectors such as clean energy and semiconductors.

Biden’s supporters say those policies were starting to bear fruit — but could have gone farther.

Now, Trump is taking a chainsaw to Biden’s industrial policy by halting green energy grants promised under the Inflation Reduction Act and attacking the bipartisan CHIPS Act. He is also ratcheting up tariffs so high that economists of all stripes are warning of recession.

In an interview, one of the most prominent boosters of Biden’s trade policy outside the administration discussed his fears about how the Trump tariffs will play out. Todd Tucker, the director of the industrial policy and trade program at Roosevelt Institute, said Trump’s approach to tariffs could set back the effort to put progressive trade policy in place by decades.

This conversation has been condensed and edited for clarity.

For a long time, the conventional wisdom about tariffs has been highly skeptical. I’m thinking about Ben Stein’s scene talking about the Smoot–Hawley Tariff Act in “Ferris Bueller’s Day Off.” How did that conventional wisdom come to be?

If we go back in U.S. history, Trump is often fond of talking about the 1890s as some sort of peak moment, and that’s because we didn’t have the progressive income tax, but we did have tariffs.

Depending on the day, he says it’s great because we collected revenue, or it might be because we were able to build Hamiltonian industries. He will pivot back and forth on what the justification is. Of course, that was not a great time for all Americans: Jim Crow, massive inequality, robber barons.

Tariffs were the main instrument that especially the Republican Party was advocating to promote domestic industry. That sort of came to a head with the Smoot–Hawley tariff in 1929, which by some measures was the highest tariff in U.S. history — certainly one of the highest tariff hikes in U.S. history — and it was attributed, in part, with worsening the Great Depression. It did not cause the Great Depression, because it had already started before that, but it certainly did not help lessen the Great Depression either.

There began to be a reappraisal of tariffs in the 1930s. FDR and Truman saw value in using selective reductions from high U.S. tariffs as a way to reward allies that we wanted to negotiate trade deals with. FDR negotiated dozens of trade agreements with all sorts of countries.

Then, in the late 1940s, they kicked that to a multilateral level by establishing the General Agreement on Tariffs and Trade, which became the multilateral forum to do what FDR had previously been doing bilaterally. Congress asserted a lot more control over the trade policy than they do today. There were hearings all the time on, like, “Do we want to change the rates on autos so we can address this competitive challenge we’re seeing from Japan?”

In the 1970s, that started to shift with the rise of neoliberalism. All sorts of government activism in the economy began to be frowned upon. Financial regulation was frowned upon, use of tariffs was frowned upon, and there started to be put into place a variety of different mechanisms to constrain government in their interventions in the economy.

You took what had been basically boring, vanilla reductions in tariffs under the early GATT negotiation rounds, and it started to become using tariff reduction as the mechanism to constrain government more broadly.

That became increasingly controversial, first in the Democratic Party. In 2005, you had almost 100 percent of Democrats vote against George W. Bush’s effort to expand NAFTA to Central America through something called CAFTA. And almost 100 percent of Republicans voted with George W. Bush to do that.

The China shock was just starting to happen. That was this clarifying moment where progressives and Democrats began to feel that this embrace of a corporate-oriented trade policy was actually not doing very well by American workers and American communities.

Obama comes into office promising to renegotiate NAFTA, promising to pivot on trade policy toward this more progressive vision that had been emerging in the 2000s — and instead just reverses course on that completely, and doing exactly more of the George W. Bush-style agreements.

That was a moment of a lot of consternation across the political spectrum. That’s where you start to see Donald Trump and early tea-party people begin to sense a real vulnerability in that waffling that had happened on trade policy, and found an opening to pin this wedge issue back onto the Democratic Party, calling into question the authenticity of the working-class appeal of Democrats.

You saw, under the Biden administration, an attempt to use targeted and strategic tariffs as a complement to a very robust domestic industrial policy. With the idea being that factories don’t get built just because the price of goods becomes more expensive. Factories get built because the government uses all the tools at its disposal to build the roads, get the permits, subsidize the research and development. To do all of the things that are necessary that go into companies being willing to make multi-year, multi-decade investments.

Tariffs play a bit part in that, but they do play a part. It’s sort of like the last mile: We’ve done all the things, through the Inflation Reduction Act and the CHIPS and Science Act, that you need to thrive, and we’re just going to give you a little bit of insurance there on the back end that you’re not going to be overwhelmed next year by Chinese imports.

What we’re seeing with Trump is the complete reverse. He is shredding all of the other tools that the government might use to make companies more confident and willing to invest. He’s gutting the Inflation Reduction Act, trying to rescind the CHIPS and Science Act. Getting rid of all that stuff, and making this bet that if we just make everything more expensive in America, eventually factories will magically appear. That’s wishful thinking.

What could a progressive tariff actually look like?

It would be directed to the most important goals for working-class livelihoods and the environment — using tariffs to address the most fundamental problems we face in the economy, rather than willy-nilly applying them across the board.

So using tariffs, as Biden did, in support of industrial policy and investments, but then going beyond that, and doing what they were talking about doing but were never able to do.

Charge tariffs based on the embedded emissions of the product, so that you are taxing dirty imports, basically taxing carbon pollution. It not only sends the right price signal to foreign and domestic producers that they need to be reducing their carbon emissions, but it also privileges companies that are already doing that.

In the USMCA was this very novel provision that allows U.S. Customs and Border Protection to seize goods that are in transit, effectively applying a 100 percent tariff to them, when there were allegations that labor that had been abused in the production process.

There is this whole investigation process. Unions in Mexico can signal that they were unjustly fired for unionizing in their workplace. Customs, almost immediately for all intents and purposes, can be seizing that good and not releasing it until the labor violation is remedied.

It delivers very rapid justice for workers, instead of what had been in past agreements. Most of them did not have any labor rights provisions at all. NAFTA did not, for example. The later trade agreements that had a labor rights provision had a legal process that could take up to a decade.

With the USMCA, they were rapidly remedying the situation — which is good for the workers themselves, and, obviously, that trickles down to more support for trade agreements.

It had another nice feature, which is that you are not penalizing all exporters — which is what Trump’s tariffs do. Instead, you are targeting it on the company that is the wrongdoer. You are getting all the benefits of trade, without getting that immediate downward pressure on wages.

A lot of people have described Biden’s tariff policy as a continuation of Trump’s first term. Is that accurate?

For the most part, the tariffs Trump put in place, Biden retained. And Biden expanded the items that were subject to a tariff, basically to complement what he had done with the Inflation Reduction Act and the CHIPS and Science Act. Which is to say, we know that China has many multiples of their own domestic consumption needs ready to export in a lot of these sectors if we don’t have some kind of strategy for addressing that. We need to make sure that the trillions of dollars that we are investing in chips and electric vehicles aren’t overwhelmed, so we’re going to put a tariff backstop to make sure that doesn’t happen. It was a marrying of industrial policy with tariff policy, in a way that was different from the Trump years.

During his first term, Trump threatened all sorts of tariffs, would make tweets proposing that he was going to abandon free trade agreements. But mostly none of it happened.

There were some select tariffs on some select commodities: steel and aluminum. There were tariffs on one country, China, but there were not wide-ranging, across-the-board tariffs for all economies and all products. It was a pretty limited set of tools, and it was a set of tools in places like the steel industry.

That was another area where Biden was willing to continue a targeted tariff on a sector that made sense. But even there, he did try to put his own input on it, which is that he tried to figure out a way to marry some of the concern with Chinese excess capacity that the steelworkers were concerned about in Trump 1, marry that with a decarbonization agenda to make the steel industry green over time, as well.

It doesn’t seem like the Trump–Biden tariffs fundamentally reset the U.S. trade relationship with China, which was one of their goals. Do you think they were working?

No. The Trump trade deal didn’t do very much of what it said it would do. The Biden use of industrial policy to try and tackle China competition was seeming to work. By 2024, it was seeming like there was a lot of investment in U.S. manufacturing from Japanese, Korean, British, European companies all across the U.S. — even with the restrictions on how entangled they could be with China.

The current policy is very haphazard. In some ways, it’s not even fair to call it a trade policy, because we’re not using trade statutes or a trade process or establishing clear trade objectives. It’s basically using an economic sanctions tool to apply tariffs, getting around Congress without announcing any clear objectives from a trade policy perspective of what they’re hoping to achieve.

We’re still assessing the fallout from all of it, but the early indications that the haphazard approach of the last week has not been working, either.

You wrote about how Trump’s rhetoric on tariff “reciprocity” diverges sharply from reality. Can you explain the difference between what Trump said he is doing, versus what he is actually doing?

If you charge us 30 percent tariffs, we will charge you 30 percent tariffs. That is typically what has been meant by reciprocity.

Trump is not doing that. Trump is doing an across-the-board 10 percent, regardless of the tariff rate that any country might be charging us. That’s not reciprocal at all. It’s just a flat tax.

There’s all sorts of technical ways one could come up with a reciprocal tariff. They didn’t do any of that right. This was just a blunt exercise of using made-up math to come up with the 10 percent that’s across the board, then individualized numbers.

Starting from where we are now, with across-the-board tariffs and chaos in the business world, do you think now we can work back to a better version of tariffs combined with industrial policy?

Creative policymakers always look at these things as opportunities. Now that this bad thing has happened, or this suboptimal thing has happened, let’s figure out how to make lemonade out of lemons.

This is a little different than that. I think Trump is polarizing the country against the use of trade restrictions.

It’s created such an acute crisis that the remedy — that I think both parties will increasingly gravitate toward — is just removing them, full stop, or putting some very substantial guardrails on their use so Congress can approve or disapprove in real time.

I think there might be wishful thinking on the part of some people that Trump will realize his error and rescind all or most of these tariffs once the market gets beat up for a few more days. Do you think there’s any chance of that happening? And would that actually resolve this crisis?

I think it would resolve the immediate crisis but having achieved none of the objectives Trump set out to achieve. If the goal was to lead to an industrial renaissance in America and you were going to only use tariffs, that would probably take 10 years to really bear fruit. Companies would have to be so convinced that the tariffs were here as a fact of life forever that they needed to figure out ways to make money off the U.S. consumer market despite the tariffs.

If you had that level of certainty, then maybe over 10 years you would start to see some industrialization on the backs of a very uncompetitive, semi-autarkic economy. But if you think it could change tomorrow, as a result of Trump’s tweeted reaction to something on Wall Street, then you’re never going to make that investment.

How do you think this plays out?

I think I’m out of the prediction game after Trump 1. It’s really hard to say. I’m watching what happens in Congress pretty closely, to see if they reassert their constitutional authority over trade. 

If that happens, that’s another exit ramp here. Basically, you go back to the constitutional order on trade, which is that nothing happens unless Congress initiates it.

Another possible off-ramp is that Trump just changes his mind because of Wall Street. That would resolve the immediate crisis, but I think there would always be questions of, unless you have un-delegated him that power, might he use it again next week?

There needs to be a congressional resolution here. And there may also be a court resolution here. The International Emergency Economic Powers Act is a pretty unconstrained delegation of congressional authority, but it’s not completely unconstrained. There are some definitions of what constitutes an emergency. I think even those minimal hurdles haven’t been met here by the executive order.

Anything you would like to add?

In 2024, we were beginning to see the results of a subsidy-forward approach to industrial policy that had a minor tariff component. That was starting to bear fruit.

We’re seeing the unraveling of a lot of that right now, in a way that sets the country back by decades, potentially, from competing in the clean energy transition.

That’s of deep concern. It should be of concern to policymakers across the ideological spectrum. We’ll see in the next few weeks, not only do they take a step back on tariff escalation, but do they go the extra mile and use congressional authority to ensure that the promises that were made to industries and communities under the Biden administration are kept?

If we resolve the tariff problem without resolving the underlying credibility of U.S. commitments problem, then we’re in a slightly less disastrous place, but ultimately still not a very good place for the long term.