Trump’s Tariffs: A Bold Strategy That Undercuts the Critics

As we discussed in Thursday’s Breitbart Business Digest, Donald Trump took the stage this week at the Economic Club of Chicago and made a clear, unapologetic case for tariffs.

While the media has focused on Trump’s colorful claims about his love for tariffs—“To me the most beautiful word in the dictionary is ‘tariff,’” for example—few have noticed the bold innovation behind his trade strategy. It amounts to a revolution in thinking about trade that completely upends the core arguments against tariffs.

“The higher the tariff, the more likely it is that the company will come into the United States and build a factory,” Trump said to an approving crowd.

It wasn’t just applause for Trump the politician—it was recognition that his tariff strategy has the potential to shake up the stale economic orthodoxy of the past 40 years.

Critics have long painted tariffs as economic self-harm, arguing they stifle innovation, protect bloated industries, and hurt consumers. But Trump’s tariffs—far from being the crude, special-interest motivated protectionism of yesteryear—represent something new and bold. He’s using them as leverage, a tool to compel foreign companies to invest in America, creating a more competitive and vibrant domestic economy. The very arguments that have been trotted out against tariffs for decades look flimsy when you understand the real game plan here: tariffs that don’t close off competition but bring it home.

Tariffs as a Competitive Catalyst

For years, free-traders have warned that tariffs will lead to complacency and stagnation by insulating domestic companies from competition. In their view, cutting off foreign competition will reduce the pressure on U.S. companies to innovate, allowing inefficiency to fester. But Trump’s strategy undercuts this argument because it’s not about shielding U.S. companies from global competition—it’s about pushing that competition to happen within our borders.

If a company wants to sell to the American market but faces steep tariffs on imports, its best option is to move production to the United States. That doesn’t eliminate competition. It relocates it. Suddenly, foreign firms that might have been content to manufacture in low-cost countries and ship their goods into the U.S. at cut-rate prices are forced to build factories here, hire American workers, and compete directly with U.S. companies. This doesn’t stifle innovation—it supercharges it.

These companies will bring their cutting-edge technologies, advanced manufacturing techniques, and capital investments into the U.S. economy, raising the bar for everyone. Domestic companies won’t be coddled—they’ll be forced to compete harder, to innovate more aggressively. The critics of tariffs haven’t caught on yet: the real protectionism was the one that let foreign companies have free rein over our market while keeping their best technologies and jobs abroad.

Breaking the Monopoly Myth

The perennial argument against tariffs is that they promote monopolies by reducing competition. This might have been true in the distant past or in other countries when tariffs were used to protect a small number of dominant domestic firms, but Trump’s strategy is anything but a rerun of monopolistic protectionist policies. His tariffs are designed not to insulate American firms from competition but to convince foreign firms to enter the American market and compete here.

By convincing foreign companies to set up operations in the U.S., Trump’s tariffs actually increase competition. This isn’t some archaic protectionism where a few American giants are insulated from market forces. This is about importing competition, bringing the best of the world to America and ensuring that our companies have to rise to the challenge.

Innovation Through Tariffs

The old critique of tariffs as innovation killers misses the point entirely. Critics argue that protectionism shelters inefficient industries from global competition, allowing them to stagnate. But Trump’s tariffs flip that logic on its head. By incentivizing companies to relocate to the U.S., tariffs are actually a vehicle for injecting innovation into our economy.

When foreign companies move their factories to the U.S., they don’t leave their advanced technologies and production processes behind. They bring their best practices, their engineering talent, and their R&D efforts into the American economy. In other words, Trump’s tariffs will encourage trade and globalization of knowledge and expertise, bringing it to American shores when that makes economic sense instead of leaving it stranded abroad. The logic of comparative advantage—the idea that countries should specialize in producing goods where they have a relative efficiency and trade for other goods—will work to foster American industry.

Consider the tech sector, where countries like South Korea, Japan, and China have made huge strides in recent years. If tariffs convince these companies to manufacture in the U.S., it could spur a wave of technological advancement and innovation right here at home. American companies, no longer resting on the comfortable assumption that they’ll face limited competition, will be pushed to innovate faster and better.

Building a Stronger Industrial Base

The critics of tariffs like to focus on the alleged short-term pain, constantly claiming—contrary to the evidence of Trump’s first term—that higher tariffs raise consumer costs. But they ignore the long-term benefits of rebuilding America’s industrial base. When companies decide it’s cheaper to manufacture in the U.S. than to pay high tariffs, they’re not just bringing jobs—they’re bringing entire supply chains. That means more investment, more opportunities for American workers, and a more resilient domestic economy.

It also means that we reduce our reliance on fragile global supply chains. The pandemic exposed just how dangerous it is to rely on far-flung production hubs for critical goods. By incentivizing foreign companies to build in the U.S., Trump’s tariffs help make our economy more self-sufficient and less vulnerable to global shocks. In the long run, that’s a win for consumers, workers, and national security.

A Smarter Kind of Protectionism

It’s easy for critics to throw around the word “protectionism” as if it’s always a dirty word. But the reality is, Trump’s tariffs are not the blunt, economy-crushing tool that protectionists of the past wielded. They’re a calculated strategy to rebalance global trade, to bring manufacturing and innovation back to the U.S., and to create a more competitive domestic economy.

The critics of tariffs want you to believe that they’re bad for innovation, competition, and consumers. But Trump’s approach, if anything, strengthens all three. By making it feasible for foreign companies to move production to the U.S., tariffs create new competition, bring cutting-edge technology into the country, and build a stronger industrial base.

Trump’s tariffs aren’t a rejection of competition—they’re a call to economic arms. They invite the best companies in the world to come to the U.S. and compete on our turf, on our terms. And that’s a strategy that even the most hardened free-trader should appreciate.