De Rugy: The tariff paradox: Americans love free trade more than they realize

In the ongoing debate over America's trade policy, politicians and pundits often claim that the public supports tariffs and other protectionist measures, such as those given to us by the Trump and Biden administrations. A new Cato Institute poll, however, reveals a more complex picture: Americans might like the idea of tariffs and "Buy American" policies, but their support shrinks when confronted with higher prices and other negative consequences.

This disconnect — between abstract preferences and real-world actions with concrete downsides — challenges the protectionist narrative currently dominating both sides of the political aisle.

The survey, conducted by YouGov, involves 2,000 Americans. The beauty is that it does two things well. It first asks people how they feel about a particular policy. It then asks them again in light of the policy's actual costs and consequences, as predicted by solid research. Looking at the different answers to the two questions reveals Americans' sentiments about an issue much better than most ordinary polls can do.

Economists understand that tariffs ultimately raise the prices of goods they are applied to. Tariffs are a tax on imported goods. This tax is paid by consumers. Americans must shoulder the additional cost for the same imported goods or pay higher prices for domestically made substitutes (whose quality might also deteriorate because their producers are shielded from foreign competition).

The poll reveals just how much Americans' initial support for protectionist measures crumbles when faced with the idea of higher prices. For example, when asked if they support tariffs on imported blue jeans, 62% initially favor such measures to boost domestic production and employment. However, a mere $10 price increase due to these tariffs flips the majority to oppose them. When the price hike reaches $50, a staggering 87% oppose the tariffs.

This price sensitivity extends also to the "Buy American" sentiment. Although 75% of Americans claim to prefer domestic products when all else is equal, 51% would choose a cheaper foreign-made item of similar quality. Even more tellingly, 70% wouldn't pay even a $10 premium for an American-made frying pan, and 76% intentionally didn't purchase a U.S.-made product in the week prior to the survey.

These findings expose a critical flaw in the argument for protectionist policies: While Americans may nod approvingly at the abstract notion of supporting domestic industries, they vote with their wallets for the most affordable goods, regardless of origin.

A reality check is crucial as policymakers on both sides of the aisle continue to parrot protectionist rhetoric and peddle protectionist policies. The Trump-era tariffs, largely maintained by the Biden administration, were sold to the public as a way to bring back manufacturing jobs and counter China's economic influence. But this poll suggests that once Americans feel the pinch of higher prices, support for tariffs will likely plummet.

The poll reveals two other truths that populist politicians would prefer to ignore. First, most Americans aren't as obsessed with trade issues as politicians are. In fact, only 1% of Americans consider trade a top priority. Second, 66% believe that global trade benefits the U.S. economy, and 58% rightly credit it with raising their standard of living. In fact, 63% favor increasing U.S. trade engagement.

So, what's the way forward? First, we need honest and clear communication about the tradeoffs involved in trade policy. Policymakers should acknowledge that protectionist measures lead to higher consumer prices. The burden should be on them to persuade us that any benefits to specific industries are worth it.

Second, if the goal is to support American workers and industries, we should explore alternatives that don't directly raise consumer prices. This could include deregulation of the manufacturing sector, and capital-gains tax reform to boost investment at home and American productivity — without resorting to trade barriers.

Third, we need better public education on trade issues. The more Americans understand the complexities of global trade and its impact on their daily lives, the better equipped they'll be to evaluate policy proposals and hold their representatives accountable.

Lastly, policymakers should pay attention to what Americans do, not just what they say. This poll clearly shows that when push comes to shove, Americans prioritize affordable goods over protectionist ideals. Trade policy that ignores this fact is likely to face significant backlash once its effects are felt in the marketplace.

As we navigate the complex waters of global trade in an increasingly interconnected world, it's vital that our policies reflect reality rather than cling to protectionist myths that don't align with Americans' actual behavior and preferences.

Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.