April 2, 2025: A Day of Economic Lunacy, Not Liberation
As a result, the president’s promised manufacturing renaissance is happening in places such as Vietnam’s Bac Ninh province, where labor demand is so high that first-time factory workers are bused from remote villages and companies are offering signing bonuses of around $570 to attract new hires.
Liberation Day’s Scorecard
On Wednesday, my Cato colleagues Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson published a terrific blog post providing data and analysis on what the tariffs have produced over the last year. It is not a pretty picture. They document a lobbying bonanza driven by companies desperate to secure carveouts, which helps explain why the supposedly sweeping global tariff regime has become riddled with exemptions. Trade policy uncertainty has increased dramatically. The US tariff system has grown significantly more complex and opaque. Rather than isolating China, the tariffs have accelerated a countertrend: other countries deepening trade and investment ties, including China, with each other as a way to reduce their exposure to erratic American trade policy, with tariffs changing more than 50 times in the last year, according to the Tax Foundation (rate increases, rate cuts, exemptions, inclusions, pauses, etc). Research has shown that American consumers, individuals and firms, absorbed about 90–95 percent of the tariffs’ cost, despite the administration’s repeated statements to the contrary.
In Wednesday’s New York Times, Harvard economist Jason Furman explained why the tariffs have failed at creating manufacturing jobs. And the headline manufacturing numbers speak for themselves. Manufacturing jobs declined by roughly 90,000 between April 2025 and February 2026, while manufacturing construction spending fell every month in 2025. The trade deficit—the original sin supposedly causing all America’s (very much overstated) long-run manufacturing decline—increased in 2025. (As Lincicome, Carrillo Obregon and Smitson note, this was partially due to American firms rushing imports before the tariffs went into effect.) Given that about 50 percent of all imports are intermediate inputs, raw materials, and capital equipment, the manufacturing stall was entirely predictable. Tariffs are a tax on domestic manufacturing, not a subsidy.
Tariff supporters’ argument hinges on an investment boom to stand up new domestic factories inside the newly erected tariff wall. The president routinely cites wild and unverified statistics about all the new investment flowing into the United States. Yet these claims have not materialized. Erica York and Emily Kraschel of the Tax Foundation note that the total foreign direct investment in 2025 of $288.4 billion “was below the prior 10 years’ average of $320.7 billion and lower than the annual totals” between 2021 and 2024. In other words, we are still waiting on the promised investment boom, and the instability of the policy landscape is a big reason why it will almost certainly never materialize.
History will likely view April 2, 2025, as a day of economic infamy, not liberation. Although the Supreme Court wisely struck down the president’s initial tariffs, the administration is rebuilding the tariff architecture on different legal scaffolding, so the saga is far from over. But after a year, the tariffs are failing their stated objectives, including their central premise: to reshore domestic manufacturing.
Clark Packard is a research fellow in the Herbert A. Stiefel Center for Trade Policy Studies at the CATO Institute.This article, originally posted to the CATO Institute website, is published courtesy of the Cato Institute.
