President Donald Trump and his economic team have offered various justifications for the tariffs the administration has begun to impose on trade partners. 

Trump has consistently advocated the use of tariffs as a tool of economic policy since at least the 1980s, when Japan threatened to rival the United States’s output. In favoring tariffs, he is at odds with mainstream economists, who generally say trade barriers restrain commerce. The president also represents a departure from the free-trade direction of the Republican Party over the past few decades. 

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In his first term, many of Trump’s advisers sought to limit him from imposing or increasing tariffs, as well as to convince him that raising tariffs would hurt the U.S. In particular, opponents of his trade policies point out that tariffs can raise costs for Americans. They also have argued that the trade deficit decried by Trump is matched by foreign investment in the U.S. 

Yet Trump has brushed off such advice and now has imposed the largest tariffs yet: 25% duties on imports from Canada and Mexico (with a lower 10% rate on Canadian energy products) and 20% tariffs on China. Additional tariffs are in store for steel and aluminum, cars, agricultural products, copper, timber, and more. 

Here are the rationales that Trump and his advisers have provided for imposing them. 

President Donald Trump

• They provide tax revenues.

Trump has maintained that tariffs aid the U.S. by bringing in revenues to the treasury. 

During his reelection campaign, for instance, Trump said that his plan to impose tariffs “will also bring trillions and trillions of dollars pouring into the U.S. Treasury from foreign countries.”

Importers, though, pay the tariffs. And the burden of the tax is thought to fall on domestic consumers to some extent, depending on the circumstances. 

• The trade deficit is too high.

Trump has frequently complained that the U.S. runs large trade deficits with the world. He cited the more-than $1 trillion trade deficit in goods last year as a justification for one of the announced tariffs. 

Economists generally don’t see trade deficits as bad, per se. Many argue that tariffs aren’t a good tool for reducing trade deficits because currency markets adjust so as to offset the impact of tariffs.

It’s worth noting that the overall trade deficit grew during Trump’s first term, even though he increased tariffs. 

• Tariffs are useful for bargaining.

Trump justified the tariffs on Mexico and Canada as leverage to force them to crack down on fentanyl.

He’s also, however, said that they will benefit the U.S. by bringing in revenues, suggesting that they are not merely negotiating tools.

• McKinley had success with tariffs.

Trump has cited the presidency of William McKinley as a reason to favor tariffs. Under McKinley, the U.S. collected much of its revenues via tariffs, and the economy saw significant growth. 

At the time, the U.S. industrial base was not yet developed and the country was not yet an economic superpower, and federal government spending was far lower. 

Treasury Secretary Scott Bessent

In his confirmation hearing to be treasury secretary, Scott Bessent said that the public should think of Trump’s use of tariffs in three ways. 

• First, as remedying unfair trade practices.

Bessent gave the example of tariffs on Chinese steel. Members of both parties in recent years have called for tariffs and other protectionist measures to counter efforts by the Chinese government to dominate certain sectors. 

• Second, as a revenue raiser
  
• Third, as a negotiating tool.

Bessent said that Trump favors the use of tariffs, rather than sanctions, because the U.S. reliance on sanctions may be driving countries not to use the dollar. 

Commerce Secretary Howard Lutnick

• The tariffs on Mexico and Canada are part of a drug war, not a trade war.

Commerce Secretary Howard Lutnick said on CNBC on Tuesday that the tariffs on Mexico and Canada are meant to prompt those countries to take action with respect to the smuggling of fentanyl into the U.S., and that the levies are not primarily about trade. 

“This is not a trade war. This is a drug war,” he said. 

• Tariffs will bring back manufacturing,

Lutnick also argued that the tariffs on autos set to be imposed on April 2 are about trade. He said that the North American Free Trade Agreement hurt domestic production of vehicles and harmed states such as Michigan and Ohio. Trump’s tariffs would reset the terms of trade, he said, and bring trillions of dollars in manufacturing back to the U.S. 

“We’re going to bring back production of enormous amounts of things and make America a manufacturing center again,” he said. 

DEMOCRATIC GOVERNORS SLAM ’TRUMP TAX’ AS TARIFFS GO INTO EFFECT

Council of Economic Advisers Chairman nominee Stephen Miran

Trump’s nominee to be the chairman of his Council of Economic Advisers, Stephen Miran, laid out a complicated rationale for Trump’s protectionist efforts in a paper published by his employer, Hudson Bay Capital.

The argument is difficult to summarize, but, among other points, it touches on the idea that the dollar has been overvalued because of its dominant role in the international financial system, hurting U.S. exports. To remedy the situation, Miran discusses several possibilities for lowering the value of the dollar without harming its status as a reserve currency. Among them is a “Mar-a-Lago Accord” among allies to lower the dollar. In this scenario, tariffs are justified as a tool to force cooperation.