When industries can boost profits more easily by lobbying for tariff exemptions than by competing in the marketplace, they will—and those incentives grow stronger as government intervention in the economy increases.
On April 2, President Donald Trump announced a baseline 10 percent ad valorem tariff on all countries. These purportedly reciprocal tariffs, which were implemented on top of the country- and goods-specific duties already in place, were calculated by referencing trade deficits—not foreign tariffs—on American exports.
Tariffs harm consumers and hamstring domestic producers by increasing the price of imported inputs, forcing domestic firms to increase the price of final goods. Importers often direct capital, labor, and time to achieve exemptions from tariffs to decrease their operating costs, no matter who is in power.
