Taxing imports is a stopgap. Where’s the plan?

By Bart Taylor | Jul 23, 2018

On one hand, it seems reasonable for President Trump to use America's vast consumer and commercial markets as leverage in trade negotiations. China, especially, has used open and relatively unfettered access to American consumers and intellectual property to great effect, even as it protects its own. Access to American markets should come with a price.

But will tariffs change the balance of power in global trade? That's the point, isn't it?

It's a hot debate, but the consensus is that no, tariffs won't diminish China's industrial capabilities or enhance ours. China, Canada, and Germany will work around cost increases, pass them on to consumers or find other buyers. That's the point -- manufacturing products that are in demand around the globe. If protecting American IP is the goal, limiting the export of key technologies and processes seems a better approach than taxing imports. And if Trump thought tariffs would encourage Harley-Davidson to make more motorcycles here to sell in newly opened markets in Europe, Harley had different ideas.

They're not alone. Brands are still motivated to go offshore to make products designed and engineered in America. American brands have helped elevate China and much of Asia by investing in labor, infrastructure, and equipment in offshore destinations from Taipei to Ho Chi Minh City.

Instead, the more permanent way to fix America's trade imbalance is to make more products here, by providing incentives and tools to empower domestic manufacturing and homegrown industries. Products that compete as exports in a global market and slake the thirst of of American consumers and OEMs.

Trump thinks tariffs will help, tweeting:

Tariffs are working big time. Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come,Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth.....

Unfortunalately for the President, support for tariffs may not sustain, even among his own party. We may not see whether tariffs are a catalyst for more domestic production.

But we do have a blueprint for developing a more robust domestic manufacturing capacity. It's there for all to see, courtesy MForesight, a pro-manufacturing think tank. It's a renewed commitment to America's "industrial commons" by way of four initiatives:

  1. Invest in translational research and manufacturing innovation. Including funding needed to develop operational prototypes and demonstrate manufacturability.
  2. Encourage pilot production and scale-up, to restore domestic production and overall leadership in emerging industries, America needs to invest in advancing manufacturing technologies, increasing pilot production, and scaling up to viable commercial volume.
  3. Empower small and medium-sized manufacturers.
  4. Grow domestic engineering and technical talent.

American brands want a fair playing field, with equal and open access to markets of the same exporters that compete with them in the U.S. Farmers and manufacturers want to be able to compete on value and quality, without host countries manipulating markets and pricing.

But until a domestic manufacturing strategy replaces tactics like tariffs, others may shape the fight for global trade supremacy. And American manufacturers will continue to seek out labor and infrastructure offshore. And the tools and expertise that China seeks to power its ambitious Made in China 2025 manifesto may emanate here.

Investing in a more capable domestic supply chain -- rebuilding our "industrial commons" -- is the first priority in avoiding this eventuality.

Bart Taylor is publisher of CompanyWeek. Contact him at