Balancing the Scales: Economic Protectionism, Consumer Impact, and a Fractured Nation

Although the Democratic and Republican parties of the United States have historically differed on most policy areas, they have occasionally agreed on foreign trade policy. The post-World War II era and establishment of the General Agreement on Tariffs and Trade — which later evolved into the World Trade Organization — set the stage for freer global trade by aiming to reduce tariffs and other trade barriers. The U.S. briefly followed this shift toward liberalization, employing bipartisan efforts to open its market and consumers to free trade before the eventual divergence among the two political parties in the early 2000s. Economic shifts like China’s rise as a global economic competitor strained bipartisan support for liberalization as the Republican Party began questioning the impact of trade liberalization on American workers, while Democrats tended to favor maintaining the free market principles overall. 

However, recently, both parties have shared an explicit protectionist stance on foreign trade. Given that the U.S. is not rich in low-skill labor, several American companies pivoted to import labor from countries like Mexico and China, which allowed them to save on labor costs. Consequently, many American workers lost their jobs to foreign countries, deepening a sense of domestic economic insecurity for the working class. As workers started seeing their jobs as vulnerable to outsourcing, they fueled political and social calls for protectionist policies and reforms aimed toward supporting American jobs. In response, then-President Donald Trump ordered tariffs on hundreds of billions of dollars of Chinese imports, among other explicitly aggressive protectionist policies, in hopes of protecting U.S. industries and jobs. Years later, the Biden administration largely kept Trump’s tariffs on Chinese goods in place and introduced some policies of its own, highlighting bipartisan efforts for implementing policies that favor domestic production and restrict foreign imports  — a rare point of agreement in today’s polarized climate — suggesting that the underlying economic and sociocultural impacts of trade on the U.S. transcend party lines. Though these protectionist policies are implemented to mitigate the negative distributional consequences of trade on American workers, and respond to a growing domestic desire to maintain economic independence, they ultimately harm consumers by raising prices and reducing choices, eventually hindering economic growth and widening the nation’s political divide.

Both administrations’ support for protectionism clearly stemmed from a response to growing concerns among American workers. This was particularly true in regard to regions like the Rust Belt, which has historically depended on manufacturing, and witnessed the impact of free trade on job losses as factories closed or moved overseas in pursuit of cheaper labor. Today, nearly five in six Americans fear they will lose their jobs in the upcoming year (Kelly, 2024). This fear in the American working class led to a bipartisan push to address the grievances of working class voters who felt betrayed by the past free trade policies. In 2018, Trump ordered a 25% tariff on imported steel and a 10% levy on imported aluminum, seeking to protect U.S. manufacturing jobs by making foreign metal more expensive and encouraging domestic production, which “domestic steelworkers applauded” (Horsley, 2018). A few years later, Biden, much like Trump, continued to focus on incentivizing domestic manufacturing by implementing protectionist policies and increasing American workers’ access to shifts in the economy. This was largely marked in Biden’s 2021 “Supply Chain Resilience” executive order which aimed to reduce U.S. dependence on foreign-made — particularly Chinese — products in critical industries like pharmaceuticals and semiconductors by diversifying supply chains with allied nations and investing in workforce training and technological advancement. Evidently, both parties seem to view protectionist policies as a means of addressing American workers’ concerns and alleviating economic disparities that seem particularly harmful to the working class. 

However, despite bipartisan intentions to protect American workers, these protectionist policies can do more harm than good to the U.S. economy by raising prices on the same goods. While protectionist measures can benefit certain industries, the outcome is often temporary. For example, while Trump’s tariffs on steel and aluminum were meant to improve American employment, a report by the Federal Reserve Board found that the tariffs caused a reduction in roughly 200,000 manufacturing jobs (Flaeen, Pierce, 2019). Any gains that were achieved by removing domestic consumers’ access to foreign markets were “more than offset” by the rising production costs for manufacturers who relied on steel (Fajgelbaum, Khandelwal, 2021, p.16). The economic burden of the tariffs was ultimately borne by American consumers as the tariffs took away access to cheaper foreign goods for producers, translating to higher prices for goods reliant on these metals like automobiles and household appliances. As the current president-elect, Trump promises to implement 20% tariffs on goods from other countries, and 60% tariffs on all goods from China, and the expectation once again “would be the U.S. consumer [bearing] the economic burden” (Chu, 2025). Similarly, Biden’s attempts to incentivize domestic production have also contributed to the growing expense of domestic products for consumers as the labor and regulatory standards in the U.S. are often higher and stricter compared to its trade allies, forcing producers to pay for those standards, which were compensated by American consumers. Trade theory suggests that protectionist policies can often result in concentrated benefits and diffused costs wherein the industries that are supported by these measures benefit at the expense of the entire consumer base of the nation. In essence, the U.S. manufacturing industries that were exposed to protectionist measures also experienced larger negative effects from rising input costs, high domestic standards, and eventual retaliatory tariffs. While protectionist policies may temporarily benefit specific sectors, they often result in the suffering of the overall consumer market due to increased prices, which can dampen long term economic growth as consumers become less inclined to supply the market with their money. 

Another reason for both parties implementing protectionist policies may be to respond to a domestic sociocultural desire to preserve American industry and reduce dependency on foreign nations. This sentiment often stems from nationalists who tend to advocate strongly for cultural sovereignty, which to them, is often tied to preserving economic independence. As already established, many American workers have in recent years expressed their concerns regarding economic security, influencing both parties to shift their political tactics to accommodate the resulting nationalist sentiment. On one hand, this was accomplished by bipartisan efforts of introducing trade barriers on key technological and agricultural goods to reflect the citizenry’s social desire to reduce cultural dependence on foreign nations. On the more social front, individual parties had to adjust how they approached the public. A study published in the Political Communication journal noted a surge in nationalist rhetoric throughout both candidates’ 2020 election campaigns (Woods, Eric Taylor, et al., 2023). Biden’s nationalist messaging focused on the nation’s diversity and saw economic protectionism as a way to make the U.S. more cognizant of various domestic sectors through domestic production and workforce. Trump’s rhetoric, on the other hand, often advocated for protectionist policies by invoking the idea that the white and Christian “silent majority” was being suppressed by internal forces like immigrants, and foreign powers like China. Ultimately, trade protection may appeal to nationalist American voters’ sociocultural concerns about preserving domestic values and economic self-reliance, inciting both political parties to shift not only their policies but also their rhetoric in order to gain the support they need. 

However, while nationalist rhetoric and trade barriers may preserve cultural sovereignty and economic independence, they risk isolating the U.S. from beneficial global exchanges, weaken alliances, and limit cultural innovation. The U.S.-China trade war exemplifies the complexity of this approach and the economic and sociocultural impacts of protectionism at large, as the tariffs implemented by Trump, and maintained by Biden, on Chinese goods eventually strained economic relations between both countries. Not long after Trump’s tariffs, China retaliated by ordering its state-owned enterprises to stop buying U.S. agricultural products, which hurt American exporters and farmers severely. Thus, protectionist policies can isolate the nation from key allies who may view these unfair barriers as a breach of trust, and further reduce collaboration on critical global issues. This can eventually harm a nation’s reputation on an international scale and hinder its ability to establish credibility and even new alliances. Consequently, protectionist policies can also limit U.S.’s exposure to diverse ideas, and cultural influences, which have not only supplemented the country’s economic and societal growth throughout history, but also counter Biden’s nationalist rhetoric built on promoting diverse ideals. Also, by responding to nationalism with nationalism, both parties have in recent years only inadvertently fueled the push for protectionist policies, deepening domestic divides. Essentially, these policies, which can only benefit a select few, combined with growing extremist sentiment which stems from worries about economic insecurity, increase societal tensions. These polarizing disparities exacerbate social polarization in the U.S. and fail to achieve any sense of assuredness in the country’s economic or sociocultural landscape.   

The convergence of the Republican and Democratic parties through the protectionist policies implemented by the Trump and Biden administrations ultimately highlights a bipartisan response to socioeconomic concerns within the U.S. Despite their often stark differences on most issues, both administrations united over the implementation of protectionist policies and trade barriers to address the impacts of free trade on American workers. While both parties were largely influenced by American workers who feared they were losing their jobs and economy to foreigners, the parallel nationalist sentiment also played a role in influencing bipartisan protectionist efforts. A protectionist response, though, has proved to have significant drawbacks for U.S. consumers who bear the brunt of higher prices, while sectors benefit temporarily, thus deepening partisan divides. Also, prioritizing economic nationalism can strain international relationships, which can hurt the U.S.’s global reputation in the long term. Given how polarized the social climate of the nation currently is, any future trade policy must balance protectionist goals with consumer interests to foster sustainable growth that considers both populist demands and the realities of cultivating a national and global economy.

References

Chu, B. (2024, November 26). Would Donald Trump’s taxes on trade hurt US consumers? BBC. https://www.bbc.com/news/articles/c20myx1erl6o

Fajgelbaum, P., & Khandelwal, A. (2021). The Economic Impacts of the US-China Trade War. National Bureau of Economic Research, 14(29315). https://doi.org/10.1146/annurev-economics-051420-110410

Flaaen, A., & Pierce, J. (2019). Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector. Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector. https://doi.org/10.17016/FEDS.2019.086

Horsley, S. (2018, March 8). Trump Formally Orders Tariffs On Steel, Aluminum Imports. Npr.org. https://www.npr.org/2018/03/08/591744195/trump-expected-to-formally-order-tariffs-on-steel-aluminum-imports

Kelly, J. (2024, February 19). Why Americans Feel Financially Distressed And Worried About Their Jobs While The Economy Looks Good. Forbes. https://www.forbes.com/sites/jackkelly/2024/02/13/why-americans-feel-financially-distressed-and-worried-about-their-jobs-while-the-economy-looks-good/

Woods, E. T., Fortier-Chouinard, A., Closen, M., Ouellet, C., & Schertzer, R. (2023). The Battle for the Soul of the Nation: Nationalist Polarization in the 2020 American Presidential Election and the Threat to Democracy. Political Communication, 41(2), 1–26. https://doi.org/10.1080/10584609.2023.2291150