If it's a day that ends in a "y", there must be more tariffs.

And, as Dean Baker and I argue, there's no reindustrialization on the other side of the chaos. There is, however, a better way.

Headlines proliferate this AM with news on the latest Trump tariffs: 25% on imported vehicles and car parts (here’s the NYT, WaPo, WSJ):

Estimates of the impact on new car prices range from about $5,000-$10,000 depending on the model and its source. As I suspect readers know by now, U.S. car companies, because they produce on a North American supply chain, will also take a hit; that “Tariffs hit auto stocks” headline refers to all car and truck producers, including the Big 3 US brands.

As I’ve documented in many posts up here, including this from yesterday, consumers are well aware of these price effects, and despite Trump administration exhortations that they should be “okay with that,” they are not.

Again, all this fallout is well known by now, including the Fed’s stagflationary (slower growth, higher inflation) markdown to their forecast on the backs of Trump’s tariffs.

What’s less well understood is the subject of a joint oped by Dean Baker and me just out in the WSJ: is the pain worth the alleged gain? As we say, the rationale for the tariffs isn’t always clear—leverage, revenues, a chance to smack trading partners around because, you know, we can??—but their most consistent claim is that the pain of disruption to commerce, supply chains, markets, and consumer prices, will lead to the gain of reindustrialization of America.

We argue that’s just wrong. Here’s why:

—They believe, against evidence, that tariffs will reduce the trade deficit, and that lower trade deficits mean a larger share of manufacturing employment.

—As we show, both links in that chain are broken. Tariffs can’t be counted on to lower trade deficits:

While tariffs may lower imports, retaliation by trading partners—which is already well under way—lowers exports. Tariffs also tend to raise the value of the dollar relative to our trading partners’ currencies and make our exports less competitive. That’s why during the trade war in the first Trump term, the trade deficit as a share of the economy stayed around 3%, about where it is now.

—Nor are trade balances reliably correlated with the manufacturing job share:

Second, we see declining shares of factory jobs in advanced economies around the world, including in Germany, a country with large and persistent trade surpluses [see figure below]. Between 2000 and 2024, Germany’s trade balance as a share of its gross domestic product grew from a deficit of 1.5% to a surplus of 5.8%. During this same period, the country’s share of factory jobs fell from 20% to 16%. A 2021 study found that the decline in manufacturing job shares was similar in both U.S. and German industrial hubs despite the stark differences in national trade balances.

Source: Federal Statistical Office; Haver Analytics

Surely part of this result relates the fact that 45% of our imports are intermediate goods for use in domestic production. “An import tax on these inputs hurts domestic manufacturing. Why have American car manufacturers pleaded with the administration not to impose tariffs on steel? And why has Alcoa, the largest U.S. aluminum producer, sought a waiver from tariffs?”

There’s another very important policy point in here, one that is perhaps a bit nuanced:

Just because sweeping tariffs won’t work—they’re all pain, no gain—doesn’t mean we should abandon policies to boost domestic production.

We most assuredly should not do so, and, in fact, we made real progress in that regard, as we note in the piece, in the Biden years. (For those who have the Bible the Abundance book nearby, see pgs 210-211: “In his four years in office, Biden put his name to several laws that broke with the anti-build trend of modern politics.”)

We don’t count on such policies to reverse the pervasive, advanced-economy trend of a declining share of factory jobs, and I’ve written extensively on how this realization should lead labor-market progressives to also focus on the quality of service jobs. But we’ve already seen early evidence of the success an industrial policy that incentivizes investments in key sectors that markets, based on their short-horizon bias, are prone to leave behind, most notably clean energy.

Once again, it’s both/and (services and factories) but in this case, along with strong dose of what not to do.