The trade war and the recent tariffs it has unleashed have sparked considerable debate. On one hand, critics argue that these measures are short-sighted and disrupt global supply chains, leading to higher costs for consumers. On the other hand, supporters claim that tariff strategy will bring back much-needed U.S. manufacturing jobs.
However, upon further examination of the events, the actual actions and what is being said, it becomes clear that President Trump is playing an entirely different game altogether. Once you understand the actual goal, it all starts to make more sense — even the chaos. Especially the chaos. And if that is the case, this could truly be one of the greatest economic booms to ever happen to the U.S. and the world as a whole. The plan is likely to work, especially because of the seemingly chaotic approach employed by President Trump.
The Chaotic Tariff Strategy in U.S. Trade Policy: How It Works in America’s Favor
At first glance, President Trump’s trade policies, including the imposition of tariffs, may seem disorderly or even reckless. The sudden and unpredictable moves, including the tariffs and corresponding trade threats, have caused upheaval in global trade, with countries scrambling to adapt. It’s easy to see how one might think that such an approach could destabilize markets and hurt long-term economic stability. However, if you take a step back to look at the tariff strategy, it becomes evident that the chaos and unpredictability are precisely the tools that work in the U.S.’s favor.
The goal of these tariffs is not necessarily to bring manufacturing back to the U.S. on a large scale — that would be a difficult and impractical feat, given the high cost of manufacturing in America. Instead, President Trump’s Tariff Strategy in U.S. trade policy is to create the appearance that he believes bringing manufacturing back to the U.S. is not only possible, but essential. The world doesn’t need to believe that reshoring manufacturing to the U.S. will be economically feasible; they simply need to believe that President Trump believes it is. Being chaotic is the only way world leaders would believe he believes it.
In other words, the appearance of chaos is a strategic maneuver. The uncertainty created by these tariffs shakes up global markets, forcing other nations to reconsider their positions and respond to U.S. demands. Whether they think U.S. manufacturing is viable or not, countries are left with little choice but to adapt. They cannot afford to ignore the possibility that the U.S. might buy significantly less from them in the long term. Whether that be as a direct result of tariffs, or the U.S. economy in decline doesn’t matter. It just matters that they believe their economy is at risk.
This is where the real genius of the strategy lies. Starting with his first administration and the initial 25% tariff on China, which stuck through the next administration, President Trump set the groundwork for today. Countries now know he means business and has the staying power to keep any additional tariffs in place long after he is gone.
The unpredictability and disruption that have defined this administration’s trade policy are not signs of confusion but deliberate actions that eliminate leverage from other nations. It forces them to act, not based on reason, but because they know the U.S. is unpredictable and could move forward with these policies regardless of the consequences.
The Benefits of Winning This Trade War with the Tariff Strategy in U.S. Trade Policy
One of the most interesting aspects of this trade war is the potential benefits, not only for the U.S. but also for other countries around the world. If the U.S. were to “win” this trade war — meaning the tariffs are eliminated or significantly reduced — the economic consequences could be transformative for both the U.S. and its trading partners.
Take the original 25% tariff on Chinese goods, for instance. Over the past few years, U.S. businesses have absorbed the cost of these tariffs. It has become a part of the business landscape that companies factor into their pricing models and cost structures. But what would happen if that tariff were suddenly eliminated? Nearly every U.S. business has already adjusted to this cost, so removing it would significantly reduce their expenses. The immediate impact wouldn’t just be lower prices for businesses; it would create a massive economic shift that would greatly benefit U.S. workers. There has literally never been a time in history when the cost of goods has decreased by 25% overnight. Certainly not for a positive reason anyway. Just imagine what that would mean. I liken it to a runner who trains with weights on her ankles. Once those weights are removed, she runs faster and stronger.
Instead of just pocketing the savings, businesses would likely use the newfound financial windfall to ramp up imports, which would require hiring more workers to handle the increased workload. They would have no choice but to invest in logistics, distribution, and all other areas to manage the increased volume of goods. It’s not just about cheaper products; it’s about creating more opportunities within the U.S. economy. The increased demand for workers would drive wages higher, which in turn would have a ripple effect throughout the economy. In the end, this could lead to a renaissance in the U.S. job market, with millions of new opportunities created.
Moreover, this shift would likely lead to healthy deflation, a rare and powerful economic force. As businesses grow more competitive and fight for market share, they will have to lower prices, benefiting consumers. They won’t have a choice, or they will lose market share to competitors who do. That’s capitalism. And with the cost of manufacturing decreasing so dramatically, companies will have the capital to do exactly that without straining their margins.
If you pay attention, this is exactly what President Trump is describing with his tariff strategy. Where people think he means it will be because of the massive increase in manufacturing in the U.S., what he actually means is just good ol’ fashioned economic opportunity. When he says he wants to make “America Rich Again”, that is truly what it would be. Just not in the way people think he means.
The net result of this economic boom would not only benefit U.S. businesses but would also massively boost demand for products from other countries overnight. Global manufacturers would also experience the largest increase in demand for their goods that they’ve ever seen. This feeds into it being a no-brainer for them as well, which is why I believe this outcome is more likely than not. For the most part, all we are asking is for them to lower their tariffs on U.S. goods to the same rate we’ve always had on their goods. That’s a small investment to make for what would be a large boom in sales for them. It would make no sense for them to resist.
As other countries grow wealthier due to our trade, their purchasing power increases — meaning they could buy more from the U.S., which is one of the key goals of these trade negotiations.
The bottle neck will be logistics. Shipping that many more goods at once. Which if you are paying attention to the news, you know that this administration is also taking strategic steps to address the logistical bottlenecks. Particularly the Panama Canal, but in other ways as well. This gives more credit to my hypothesis and further indicates that this actually is a significantly more strategic trade strategy than it may look from the outside. We are literally setting ourselves up for the best of times.
Bringing Back Assembly, Not Component Manufacturing in the Context of U.S. Tariff Strategy
While much has been made about reshoring manufacturing, it’s important to note that President Trump isn’t necessarily trying to bring all levels of manufacturing back to the U.S. The reality is that component-level manufacturing — producing individual parts or raw materials — is unlikely to return to the U.S. anytime soon due to high labor and production costs. However, final assembly and certain types of manufacturing will remain in and more will return to the U.S.
This type of reshoring makes sense because many U.S. companies already rely on low-cost overseas components to assemble their products domestically. This enables companies to manufacture high-quality goods in the U.S. at competitive prices, leveraging global supply chains for the components while maintaining domestic production for assembly and the manufacturing they still do in-house. This model allows U.S. businesses to stay competitive on the world stage while providing significant economic opportunities at home.
By incentivizing the reshoring of final assembly using inexpensive overseas components, this strategy would allow U.S. manufacturers to produce more complex products that were once considered too expensive to make in America. These goods could then be sold not only in the U.S. but also in international markets, providing a boost to both U.S. manufacturing and global trade.
Not Losing U.S. Manufacturing
While it may seem like this would expedite the outsourcing of component-level manufacturing, and there is truth to that, it won’t be as bad as it seems. There will still be a need for component-level manufacturing in the U.S., and always will be. Generally, this need arises for things needing short lead times, agile development, and products that are too expensive to ship economically from overseas. There will not only still be a need for that; there will be an increased need for it. U.S. job shops and in-house manufacturing will shift from high-volume production runs to more specialized work that truly needs to be done domestically. And otherwise items that have made-in-America requirements. Especially as overall economic activity increases, job shops shouldn’t fear this new world; they should leverage it to their advantage. Those who do will see massive opportunity.
It’s also worth noting the national security aspect of this all. Back in WWII, American factories retooled to produce tanks, airplanes, artillery, etc. It was generally automobile factories and other heavy machinery factories that retooled quickly. Since then, we’ve lost much of that capability and our ability to retool quickly if needed.
By bringing back automobile and other heavy equipment manufacturing, we strengthen our ability to survive another world war. The thing is, we don’t necessarily need the component-level manufacturing to do that. We just need the ability to assemble large items and a component-level skill set that can retool when needed. We don’t lose that.
As well, though modern wars will likely still leverage large traditional war implements, they will also leverage technology. We need the capability to make chips and circuits in the U.S. so that, in the event of a war, we can retool those factories quickly as well. Even if it’s not economical to do so, it’s a matter of national security so will happen one way or another.
In both cases, pay attention to the news, and you’ll see that these industries are indeed making plans to invest in the U.S. as a result of this administration’s trade war. No, those industries won’t offset the likely job losses from high tariffs, but again, that was never the plan. Those industries are coming back due to national security. The fact that the endgame for the tariff is near zero is what makes it so those job losses are temporary and will come back quickly. This observation further supports the hypothesis in this article, and how, though the strategy may seem chaotic, it’s actually much more strategic than it might appear.
Conclusion
In the end, the tariff strategy in U.S. trade policy may seem chaotic, but its ultimate purpose is to shift the balance of power in U.S. trade negotiations and eliminate leverage from other nations. If President Trump had taken a more logical and realistic approach, he wouldn’t have the leverage he does. He also doesn’t need to convince every country; he only needs to convince a few. Those few will enjoy no tariffs, or next to no tariffs, which will drive U.S. industry to reshore there in a hurry. Other countries will see that and want the same, resulting in them also reducing their tariffs to get some of that business. The dominoes will fall as more and more countries realize that what President Trump was asking for all along is actually a great thing for them as well. The entire world would have to decide they hate prosperity for the strategy not to work.
And the goal is to make trade fairer. The key is not bringing all manufacturing back to the U.S., but creating the appearance of it, which forces other countries to act. While it’s true that a perfect solution to trade imbalances may never exist, this strategy has the potential to shift the entire global economic landscape in favor of the U.S. instead of against it.
For a deeper dive into an alternative strategy — one that might be more controlled but possibly less effective — be sure to check out my next article, What I Would Have Done Differently.
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