Here’s a letter to a new correspondent.
Mr. Barnett:
Thanks for sharing Oren Cass’s September 4th post in which he argues that Trump’s tariffs are successful. Here are two reactions – one general, the other detailed.
First, no informed free-trader denies the possibility that protectionism can raise domestic manufacturing output, employment, and wages. Therefore, positive movements in these statistics do nothing to discredit the case against protectionism. That case is about the economy as a whole. Tariffs that artificially direct workers, capital, and other resources into manufacturing direct those same workers, capital, and resources out of other productive employments. Cass errs by implying that the rise in total manufacturing output and employment, and in some wages, are evidence of protectionism’s success.
As it happens, since “Liberation Day” (April 2nd, 2025) the average inflation-adjusted wage in the non-farm economy as a whole has been flat, with the average real wage for all production and non-supervisory workers actually falling somewhat.*
Second, while it’s true that manufacturing output is up since “Liberation Day,” Cass too quickly praises protectionism. Indeed, if, as Cass suggests, we should interpret this change in manufacturing output as an effect of trade policy, then protectionism looks pretty bad.
In the 16 months starting in April 2025 through July 2026, manufacturing output rose at an average monthly rate of 0.12%. How does this figure stack up against past performances of manufacturing output, over the same time span, following some notable trade events – events that Cass and other protectionists routinely decry? Answer: Not well.
In the first 16 months (January 1976 through April 1977) of the U.S.’s current 50-year string of annual trade deficits, manufacturing output rose at an average monthly rate of 0.30% (or 2.5 times faster than the rate of growth since “Liberation Day”). In the first 16 months of NAFTA (January 1994 through April 1995), manufacturing output rose at an average monthly rate of 0.34% (or nearly three times faster than the rate of growth since “Liberation Day”). And in the first 16 months (December 2001 through March 2003) of China’s membership in the WTO, manufacturing output rose at an average monthly rate of 0.23% (or almost twice as fast as the rate of growth since “Liberation Day”).**
I concede that it’s child’s play to torture data into humming a desired hymn. But examination of enough appropriate data, over sufficiently long time spans, convincingly reveals that protectionism makes countries poorer while free trade enriches.
The empirical literature here is vast. It includes, but is hardly limited to, James Gwartney, Robert A. Lawson, Ryan Murphy, Matthew D. Mitchell, Horst Feldmann, and Walker Wright, Economic Freedom of the World: 2025 Annual Report; Douglas Irwin’s 2020 Free Trade Under Fire, Arvind Panagariya’s 2019 Free Trade & Prosperity; James Feyrer, “Trade and Income – Exploiting Time Series in Geography,” American Economic Journal: Applied Economics, Vol. 11, October 2019; and Romain Wacziarg and Karen Horn Welch, “Trade Liberalization and Growth: New Evidence,” World Bank Economic Review, Vol. 22, June 2008.
If you correspond also with Oren Cass, I recommend that you ask him to engage with this literature.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030* I asked Claude to do these calculations: https://claude.ai/share/3c279e58-588c-4ce6-a9cc-6397fb35247b
** Calculated by me from these data.
