MTP Interview With JD Vance Exposes Embarrassing Lack Of Knowledge On The Economy

In a Meet the Press interview released this morning, JD Vance delivered a defense of tariffs, which seems to disregard both history and basic economic principles. His argument—centering on tariffs as a tool to protect American jobs and boost wages—repeats the long-debunked notion that protectionism benefits the U.S. economy. The data says otherwise. Tariffs, especially during the Trump era, functioned as taxes on American consumers and businesses. The claim that tariffs will somehow boost wages and jobs is simply not supported by evidence.

Tariffs Are Just Taxes, and Americans Pay Them

When Kristen Welker pointed out that Trump’s tariffs cost American consumers and businesses $80 billion, Vance brushed aside the reality, suggesting the burden falls on importers rather than consumers. This is categorically false.

Let’s break this down. When tariffs are imposed on imported goods, the higher costs don’t fall on the foreign producers. They are passed on to American consumers and businesses who rely on these goods. Importers must absorb the cost or, more often than not, pass it along through price increases. This is confirmed by the Federal Reserve Bank of New York, which estimated that the tariffs Trump imposed on China raised consumer costs by about $831 per household per year by 2019 .

Chart 1: Cost of Trump’s Tariffs to Households

Below is a breakdown of the estimated cost increase in household goods due to Trump’s tariffs.

As seen, tariffs led to significant increases in costs for American families, impacting everything from electronics to home appliances.

Studies from Harvard University and Columbia University have also supported these findings, showing that tariffs raised prices for many consumer goods, disproving Vance’s dismissal of the $80 billion in extra costs .

The Inflation Debate: Missing the Point

Vance also argued against Kamala Harris’s assertion that additional tariffs would exacerbate inflation. While it’s true that tariffs during Trump’s presidency didn’t cause widespread inflation immediately, that doesn’t mean they didn’t have other adverse effects.

Here’s where Vance’s argument falls apart: even if tariffs didn’t cause inflation, they absolutely raised prices in key industries. For example, tariffs on imported steel raised costs for manufacturers. According to a report from the Peterson Institute for International Economics, U.S. companies that rely on imported raw materials—such as auto manufacturers—saw significant price increases .

Chart 2: Steel Price Spike Post-Tariffs

This chart shows the increase in steel prices following the tariffs imposed by Trump in 2018.

Higher costs for inputs like steel or aluminum create a ripple effect, ultimately raising prices for finished goods like cars and machinery. In the end, it’s consumers who foot the bill.

While inflation remained relatively stable in some sectors, these targeted price hikes were enough to disrupt industries, especially manufacturing. Vance’s claim that tariffs created jobs also doesn’t hold up. According to the Bureau of Labor Statistics, there was no long-term manufacturing resurgence .

Welker: Do you acknowledge that consumers will ultimately pay more if there are more tariffs. Do you acknowledge that?

Vance: No, I don’t. Economists disagree about the effects of tariffs.. pic.twitter.com/iORjF3nP1W

— Acyn (@Acyn) August 25, 2024

A Historical Failure of Protectionism

Vance’s notion of a “dynamic effect” where tariffs create jobs and raise wages is nothing new—and it’s been repeatedly debunked. Protectionist policies have been tried, tested, and failed throughout history. Let’s look at the historical record.

The Smoot-Hawley Tariff Act of 1930 is perhaps the most notorious example. This sweeping tariff raised duties on more than 20,000 goods. The immediate result was a collapse in international trade as retaliatory tariffs followed. The global economy contracted sharply, and many historians argue that these tariffs deepened the Great Depression.

Fast forward to the early 2000s, when George W. Bush imposed steel tariffs. The aim was to protect the struggling American steel industry, but the result was predictable: higher prices for manufacturers and job losses in sectors that rely on steel. The International Trade Commission found that while a few steel jobs were saved, far more jobs were lost in manufacturing .

Trump’s tariffs followed the same pattern. The National Bureau of Economic Research found that these tariffs raised costs for U.S. manufacturers, reduced investment, and hurt overall employment in the industrial sectors that Trump sought to protect. In fact, U.S. steel companies struggled even with tariffs in place, partly due to retaliatory tariffs from other countries and the disrupted global supply chains .

Chart 3: Tariff Retaliation and Job Losses

These figures show how retaliatory tariffs, especially from China, resulted in job losses across key sectors of the U.S. economy.

Wages vs. Prices: The Real Tradeoff

At the core of Vance’s defense is his claim that tariffs boost wages. Even if consumer prices rise, Vance argues, workers will see a benefit through higher wages, which will supposedly offset the cost. But this is overly simplistic and ignores key facts.

Tariffs may protect some domestic jobs in the short term, but they also raise input costs, hurt consumers, and can result in job losses elsewhere. The Tax Foundation estimated that Trump’s tariffs could cost nearly 150,000 jobs across industries that rely on imported goods . The net effect is job losses, not gains.

Meanwhile, the wage boost Vance promises is mostly an illusion. Even if wages rise slightly in certain sectors, the overall cost of living increases due to higher prices on goods and services. As a result, any modest wage increase gets swallowed by the higher costs.

The False Promise of Tariffs

JD Vance’s defense of tariffs ignores the inherent tradeoff they represent: while tariffs may protect local industries and create some jobs, they do so at the cost of higher prices for consumers. Trump’s promise to simultaneously increase domestic manufacturing through tariffs and reduce prices is simply impossible. The reality is that tariffs raise production costs, and those costs are passed on to consumers. Trump is lying when he suggests that we can have it both ways—lower prices and more American jobs—because the very mechanism of tariffs undermines price stability. Protectionism may give the illusion of short-term gains, but in the end, it’s a losing strategy that leaves the average American paying more for less.

Featured Image via screengrab