Economic nationalism, trade and production chains: Trump's tariffs in an interdependent world

Purpose Trump's tariffs came in two waves, the first in 2018 and the second on April 2, 2025, often called “Liberation Day”. While the tariffs were applied to many countries, China was singled out as a major violator in terms being of a disruptor of fair trade, balanced trade and use of trade to enhance the manufacturing sector in China at the expense of other countries. The USA tariffs were designed to correct trade imbalances and to bring back American jobs. The aim of this paper is to examine the effectiveness of the tariffs in terms of these two objectives. There are two crucial parts of this examination. The first is to use trade theory to understand what tariffs can and cannot do. Specifically, bilateralism and multilateralism are examined as trade strategies in a multilateral world characterized by high levels of interdependence and transnational cross-cutting supply chains transnationally. The second aspect of the analysis is to closely examine the empirical record as far as manufacturing jobs are concerned and to compare the importance of trade with other explanations, especially ones based on productivity in the manufacturing sector. The main conclusion of the paper is that Trump's tariffs are not effective in terms of lowering overall trade deficits, even if they have succeeded against specific countries and that jobs in the manufacturing sector have not returned to the USA's shores and are not likely to do so. Design/methodology/approach This study employs a case study of Trump's tariffs in the context of the United States of America–China relationship, with special attention to the loss of manufacturing jobs in the United States of America. Findings The findings are that bilateral tariffs don't work because trade among partners is easily changed. Also, the loss of manufacturing jobs in the USA, as in other countries, is due to longer-term structural forces having to do mostly with increasing productivity (which displaces jobs) and changing preferences for consumption of services compared to both manufactured and agricultural goods. Research limitations/implications The main research implications are that bilateral trade deficits and jobs in the manufacturing sector are not easily changed by the use of tariffs, particularly bilateral tariffs. The standard explanation for this is that overall deficits are due to macroeconomic policy having to do with savings, consumption and investment. China is a high-savings, low-consumption economy and the USA is a low-savings, high-consumption economy. Practical implications The practical implications are that bilateralism, either with regard to trade or capital flows, is not an effective strategy in a multilateral world. To be effective, tariffs should be negotiated on a multilateral basis. Otherwise, individual countries can easily alter trade patterns. USA tariffs against China have been met by China redirecting its trade to Southeast Asia and to Latin America. Also, it is self-defeating for the USA, or any country by itself, to impose tariffs on countries where there is a large USA multinational presence. That is the significance of tariffs in a world of integrated production chains. Social implications Social implications imply that it is better to recognize the high levels of interdependence and try to work out problems in a large, multilateral, cooperative setting. The World Trade Organization has dispute resolution mechanisms, which the USA has used in the past, quite successfully. Originality/value There has been some, but not a lot of work in political science on the use of tariffs and other forms of economic statecraft in a world of complex interdependence. This is one of the first studies to use advanced political economy thinking to address the problems of tariff use with full attention not only to international conflicts but also domestic politics.