I. Introduction:
The Charge Against Tariffs
For years, critics of protectionism have repeated a simple refrain: tariffs are a tax on consumers—and therefore a tax on the poor. This accusation is stated so often, and with such assurance, that it has hardened into a kind of economic dogma. It rests on an assumption so neat, so convenient, that few pause to question it: that companies merely pass 100 percent of any tariff cost directly into retail prices. According to this view, every tariff instantly becomes an invisible sales tax that falls on the most vulnerable households.
This argument is elegant, but it is also profoundly incomplete.
Real-world evidence from 2018 to 2024 tells a far more complex story. In industry after industry, tariff costs were absorbed not by low-income consumers, but by importers, retailers, and foreign manufacturers fighting to retain access to the American market. In some cases, domestic firms cut margins to stay competitive; in others, foreign exporters quietly lowered prices. The assumption of perfect, frictionless “cost pass-through” belongs more to an academic chalkboard than to the actual behavior of businesses operating under competitive pressure.
When understood properly, tariffs are not simply price instruments—they are tools of national development. They are levers that can protect workers, rebuild industrial ecosystems, and strengthen national security. They can shorten supply chains, revive local communities hollowed out by decades of deindustrialization, and restore the productive foundation on which any middle-class society depends.
Catholic social teaching has long warned against treating human labor as a mere cost variable. Economic policy must serve the dignity of the person, not reduce workers to passive recipients of whatever global markets dictate. A nation that neglects this moral truth risks losing not only its industries, but its soul.
The deeper truth is this: far from taxing the poor, well-designed tariffs prevent the long-term economic harms that have devastated working-class Americans for decades. They defend wages, preserve industrial dignity, and restore the conditions under which families and towns can flourish. The charge against tariffs is loud, but it is shallow. The case for them—when viewed through history, lived experience, and national interest—is far stronger than critics allow.
II. The False Assumption: “Companies Just Pass the Costs to Consumers”
The most common objection to tariffs rests on a deceptively simple premise: when the government imposes a tariff, companies merely raise prices to compensate, and consumers—especially the poor—bear the full burden. It is a neat claim, and its simplicity gives it rhetorical force. But it is rooted in an abstract theory of price-setting that bears little resemblance to how markets actually function.
In the real world, prices cannot rise indefinitely. Every firm faces competitive ceilings: if it pushes its prices too high, customers walk away, postpone purchases, choose substitutes, or shift to a competitor. Market pressure forces producers and retailers into complex calculations, and these calculations often prevent them from fully passing tariff costs onto consumers. In other words, tariffs do not exist in a vacuum; they operate within the constraints of competitive behavior.
As Rerum Novarum reminds us, economic life must reflect real human conditions, not abstract formulas. Markets do not operate outside the moral order; they operate within it.
This is exactly what the data from 2018 to 2024 revealed. When tariffs were applied to a wide range of goods—steel, aluminum, washing machines, electronics, industrial components—companies did not simply slap a proportionate price increase onto every product. Instead, they absorbed a meaningful share of the added cost through reduced margins, renegotiated contracts, and supply-chain adjustments.
Empirical analyses by independent researchers found that roughly 20 to 50 percent of tariff costs were absorbed by importers and foreign exporters rather than American households. In certain categories—especially where global competition was fierce—prices did not rise at all. Chinese producers, in particular, often lowered their export prices to preserve access to the U.S. market, effectively paying part of the tariff themselves.
These results should not surprise anyone familiar with real-world business practices. Executives do not enjoy unlimited freedom to raise prices; they make decisions under the discipline of consumer behavior, cost structures, and competitive threats. The notion that tariffs always function as a direct “tax on the poor” presumes a world where companies face no competitive constraints and consumers meekly accept whatever price is placed before them. That world does not exist.
The “tariff = tax on the poor” narrative depends on an unrealistic view of price-setting. Once actual market dynamics are taken into account, the simplistic claim collapses. Tariffs do impose costs—but those costs are often borne by the very corporations and foreign suppliers that critics presume to shield.
III. The Real Tax on the Poor: Deindustrialization
If tariffs are not the villains they are made out to be, then what has truly burdened America’s working class? The answer is not difficult to see, though many policymakers still refuse to face it: the real tax on the poor has been deindustrialization.
For nearly half a century, Americans were promised that cheap imports would enrich them. Cheaper clothing, cheaper appliances, cheaper electronics—this, we were told, was the dividend of globalization. And yet, as prices fell on store shelves, something far more costly was happening elsewhere: factories closed, production moved overseas, and the economic backbone of countless towns snapped in two.
The results can be read on the American landscape like the chapters of a tragedy. Communities once anchored by steel mills, auto plants, and machine shops were hollowed out. Middle-income manufacturing jobs—jobs that supported families and built neighborhoods—were replaced by low-wage service work that offered none of the security, dignity, or upward mobility those communities once enjoyed. Wealth and opportunity drained toward a few prosperous coastal cities, leaving the interior of the country with shrinking tax bases, declining home values, and a generation of young people with few prospects close to home.
The collapse of productive work has had consequences far beyond economics. Marriage rates fell. Birthrates declined. Addiction and opioid abuse rose. Churches emptied. Mental and physical health deteriorated. Sociologists now track “deaths of despair” across regions that once produced steel, automobiles, tools, machinery, and textiles. These are not abstract indicators—they are the measure of a society that has lost the ability to sustain itself.
Catholic social teaching holds that work is the primary means by which a person participates in God’s creative action. When dignified work disappears, communities do not simply lose income—they lose purpose. They lose hope. They lose the social fabric that binds families together.
Critics of tariffs seldom acknowledge this cost. They tally the dollars saved on imported goods but ignore the far larger losses experienced when a family wage disappears, when a father cannot find stable work, or when a town’s central employer shuts its doors forever. A few dollars off a television set cannot compensate for the disappearance of entire middle-class livelihoods.
This is where tariffs matter. Properly designed, they prevent the race to the bottom in which multinational corporations shift production to the lowest-wage jurisdictions on Earth. Tariffs protect the industries that anchor communities—not by shielding inefficiency forever, but by ensuring that domestic producers can compete on fair terms rather than on a global labor auction. When companies invest at home, towns revive, wages rise, and economic stability returns.
The true “tax on the poor” has never been tariffs. It has been the systematic dismantling of the productive economy in the name of cheap imports, financial efficiency, and short-term shareholder value. That tax is paid not at the cash register but in broken families, declining towns, and generations robbed of opportunity.
The real burden on America’s poor is not the price of imported goods—it is the loss of productive work.
IV. Wages Matter More Than Walmart Prices
Debates over tariffs often become narrow debates over prices, as if the sum total of a nation’s economic well-being could be measured at a checkout counter. But Americans are not merely consumers. They are workers, parents, citizens, and neighbors. Their prosperity cannot be reduced to bargain-bin calculations. It depends on the stability of their incomes, the strength of their communities, and the availability of dignified work that supports family life.
This is the fundamental flaw in the “tariffs hurt consumers” narrative: it assumes that saving a few dollars on imported goods outweighs the consequences of wage collapse and job loss. But no serious economist—or ordinary household—would ever prefer a $10 price increase on basic goods to a $10,000 reduction in annual income caused by the closure of a local factory. The arithmetic of everyday life exposes the poverty of the price-focused argument.
Cheap goods can ease a household budget, but they cannot sustain a household. They cannot build a future, support a mortgage, fund a retirement, or give young people a reason to stay in their hometowns. Economic dignity does not come from the retail aisles of multinational corporations; it comes from the presence of stable, meaningful work that allows a family to plan its life with confidence.
As Laborem Exercens teaches, work is the foundation of the “social question” because it is through work that a person builds a family, participates in society, and discovers his vocation. A system that prizes cheap goods over living wages contradicts this vision and hollows out the moral order necessary for a flourishing community.
Tariffs play a role in re-establishing precisely this kind of economic foundation. By ensuring that domestic producers are not undercut by wages that are a fraction of American standards—or by governments that subsidize industries to dominate markets—tariffs help restore wage-supporting industries at home. They encourage companies to invest domestically, train local workers, and rebuild the manufacturing ecosystems that once sustained broad middle-class prosperity.
A nation cannot discount its way to greatness. It cannot depend on a flood of cheap imports while neglecting the earning power of its own citizens. When work is strong, families are strong; when work disappears, no stack of inexpensive appliances can fill the void.
Low prices cannot compensate for low wages. And any economic policy that treats Americans merely as consumers rather than as workers and citizens has already misdiagnosed the problem.
V. The National Security Argument
There is one dimension of the tariff debate that even the most ardent free traders can no longer ignore: national security. In an era of geopolitical rivalry and fragile global supply chains, tariffs cannot be dismissed as mere economic tools; they function as a form of national insurance. To view them solely through the lens of consumer prices is to misunderstand their role entirely.
The United States has allowed itself to become dangerously dependent on foreign powers—particularly China—for critical materials and essential goods. Our supply chains for antibiotics, rare earth elements, electronics, microchips, steel, and basic industrial components run through a nation that openly declares its ambition to replace the United States as the world’s leading power. This dependency is not simply an economic inconvenience; it is a strategic vulnerability.
History shows that great nations rarely fall because of a shortage of inexpensive consumer products. They fall when they lose control over the essentials: medicine, energy, infrastructure, and the capacity to produce what national survival requires. A country that cannot manufacture its own antibiotics, cannot mine its own strategic minerals, and cannot forge its own steel is a country that has outsourced not just its industries but its independence.
Catholic social teaching affirms that political authority has a solemn duty to safeguard the common good and protect the vulnerable. A nation unable to produce the essentials required for its people—especially its poorest—cannot fulfill this obligation.
And who suffers most when national security falters? It is not the wealthy, who can relocate or insulate themselves from disruption. It is working-class families who rely on stable supply chains, affordable essentials, and a nation capable of responding to crises. A breakdown in medical supply chains, a disruption in energy infrastructure, or a hostile cutoff of key materials would impose costs far greater than any modest price increase at the store. The poor pay the highest price when a nation is unprepared.
Tariffs, in this context, are not taxes—they are tools to rebuild the strategic industries that ensure national resilience. By encouraging domestic production of steel, semiconductors, pharmaceuticals, and critical minerals, tariffs help reduce our exposure to geopolitical blackmail. They shorten supply chains, restore industrial capacity, and revive the productive bedrock on which any sovereign nation depends.
A secure nation is one that can produce what it needs. A vulnerable nation is one that hopes its adversaries will remain benevolent. Tariffs exist to close that vulnerability, not to punish consumers but to protect them from disruptions far more costly than moderate price adjustments.
Security is not a tax—it is a responsibility. And protecting the nation’s capacity to stand on its own is one of the few responsibilities that no serious government can neglect.
VI. Foreign Producers Often Lower Prices to Keep Access to U.S. Markets
There is a crucial fact in the tariff debate that rarely reaches the public conversation, despite being one of the most decisive realities uncovered in recent years: foreign producers often lower their export prices when the United States imposes tariffs. This single dynamic undermines the assertion that tariffs inevitably burden American households.
The United States is the world’s most desirable consumer market—vast, affluent, and indispensable for many export-dependent nations. Losing access to it, even partially, can be devastating for foreign manufacturers. For this reason, when tariffs are imposed, foreign firms frequently respond not by abandoning the U.S. market, but by cutting their own prices to remain competitive. They absorb the hit because the alternative—surrendering market share—is far more damaging to their long-term interests.
This is not a theoretical claim. It is precisely what happened during the 2018–2019 tariff rounds under the Trump administration. Numerous empirical studies found that Chinese exporters, particularly in highly competitive sectors like steel, electronics, and machinery, reduced their prices substantially to offset the new tariff penalties. They adjusted their margins downward, trimmed profits, and even accepted temporary losses in order to retain access to American buyers. In many cases, the majority of the tariff’s nominal cost was paid by the supplier, not the consumer.
Importers and retailers also absorbed a significant share of the impact, further reducing the amount passed on to households. U.S. firms, facing competition from both domestic and foreign rivals, could not simply tack tariff costs onto their prices without risking market share. The assumption that companies have unlimited pricing power proved false once again.
The result was striking: the actual burden of many tariffs fell on foreign companies and global suppliers, not on American consumers—let alone the poor. Goods in some categories saw no meaningful price increase at all, specifically because exporters absorbed the shock.
The Church has long opposed economic systems that sacrifice workers for abstract ideas of “efficiency.” Here, too, reality echoes moral teaching: foreign firms absorb cost because the U.S. market has moral and economic leverage they cannot ignore.
Economists studying the 2018–2019 tariffs found that foreign exporters, particularly Chinese manufacturers, sharply reduced their prices to remain competitive in the U.S. market. This wasn’t speculative—it showed up in customs data, firm-level financial reports, and large-scale economic modeling. In several industries, exporters absorbed a majority of the tariff’s cost.
Here’s what the evidence revealed:
Chinese exporters absorbed up to 50% of tariff costs, according to a leading NBER study.
Following the steel tariffs, global steel prices fell about 9%, reflecting price cuts by foreign mills.
Samsung and LG reduced washing machine export prices by 8–10% before moving production to the U.S. and Mexico.
Both the Federal Reserve and the IMF reported lower-than-expected price pass-through across multiple product categories.
Far from taxing American households, tariffs pressured foreign suppliers to discount their goods—evidence that the burden of adjustment fell abroad, not on the working poor at home.
VII. Fairness: Why Should American Workers Compete with Forced Labor?
There is one aspect of the tariff debate that critics rarely confront, perhaps because it exposes the deep contradiction at the heart of modern free trade: American workers are not competing against free markets—they are competing against distorted markets, often built on exploitation and coercion. If fairness is to mean anything in economic policy, it must begin by acknowledging this truth.
Consider China’s labor system. In the Xinjiang region, credible investigations by journalists, human rights groups, and international bodies have documented forced labor programs involving Uyghur and other minority populations. These workers do not negotiate wages. They do not strike. They do not leave. Their conditions are not remotely comparable to those of an American laborer, or even to the conditions of workers in most other developing nations. Yet the products of this coerced labor flow freely into global supply chains, often undercutting American manufacturers who must comply with labor standards, safety regulations, and environmental protections.
Even outside of Xinjiang, many exporters operate in environments where wages are artificially suppressed, environmental laws are weak or nonexistent, and government subsidies or currency manipulation give firms an advantage no American competitor could match. When a nation pays its workers a fraction of American wages, ignores pollution controls, and funnels state cash into targeted industries, this is not “competition” in any meaningful sense—it is a rigged contest in which American workers are told to run uphill against a stacked deck.
Tariffs exist, in part, to correct this imbalance. They are not punishments on consumers or impediments to free exchange. They are mechanisms that level the playing field so that American workers are not forced into a race to the bottom—competing with wages set by dictatorships, oligarchies, or corporations unconstrained by the ethical obligations we expect at home. A tariff does not so much distort the market as it undistorts it by neutralizing the unfair advantages created by coercion, subsidy, and regulatory evasion abroad.
Quadragesimo Anno warned that economies built on exploitation eventually corrode the societies that profit from them. No Catholic vision of the common good permits a nation to benefit from coerced labor abroad while its own workers are displaced at home. Solidarity demands better.
Opponents often speak as if free trade were a contest between equals. It is not. It is a contest between workers who must live under American laws and foreign firms that often ignore laws entirely. And when political elites praise the wonders of cheap imports, they seldom admit that the low prices are achieved through conditions they would never tolerate for their own children or neighbors.
A nation that believes in human dignity cannot build its prosperity on the labor of the coerced, the unprotected, or the dispossessed. Nor can it expect its own middle class to survive when it is systematically undercut by practices no American factory is permitted to imitate.
Tariffs defend American workers from unfair competition—not from free markets, but from distorted markets. They ensure that the price of a product reflects something more than the desperation of those who produced it. And they remind us that economic policy is not merely a question of efficiency, but of justice.
Does Fair Pay Cause Inflation?
Critics often warn that restoring fair American wages—or reshoring production—will simply make everything more expensive. It is a familiar refrain: higher labor costs equal higher prices. But this claim, repeated endlessly, dissolves under closer examination. Higher wages do not automatically cause inflation. They never have.
Inflation arises when companies raise prices without fear of losing customers, or when productivity fails to rise with earnings. When competition is strong and firms innovate, higher wages are absorbed through efficiency and scale. We know this from American history. For nearly half a century—from 1865 to 1913—the United States had high tariffs, high wages, strong unions, and the fastest industrial growth in the world. American workers were the best paid globally, yet real prices remained stable while living standards surged.
But this phenomenon is not confined to the past. We have modern examples as well:
Germany: high wages + strong production capacity
South Korea & Taiwan: rising wages paired with productivity and innovation
U.S. energy sector: very high wages, globally competitive prices
Recent U.S. reshoring: semiconductor and EV plants paying strong wages yet attracting investment
These examples underscore a simple fact: when productivity rises, high wages do not create inflation—they create prosperity.
By contrast, the low prices of many imports today have little to do with efficiency. They often reflect suppressed wages, lax environmental standards, heavy state subsidies, or even forced labor. A price made possible only by exploitation is not a sign of economic virtue; it is the externalization of ethical failure.
True justice is not measured by the cost of a toaster but by whether the worker who made it can support a family. A healthy society is not built on discount aisles. It is built on dignified work, rising wages, and industries strong enough to support families.
VIII. Historical Proof: Tariffs Helped Build the American Middle Class
If modern commentators treat tariffs as an exotic policy tool, American history tells a different story. For more than half a century—from 1861 to 1913—the United States embraced a protectionist framework more comprehensive than anything seen since. This was not a fringe experiment. It was the dominant national policy of Lincoln, Grant, McKinley, and Theodore Roosevelt. Under this system of strategic tariffs, industrial development, and domestic investment, America rose from a war-torn agricultural republic to the world’s leading industrial power.
The results were unmistakable. Wages in the United States rose faster than anywhere else on earth. Manufacturing employment expanded, productivity soared, and the nation became a magnet for millions seeking economic opportunity. Factories multiplied, small towns flourished, and entire regions—Pittsburgh, Detroit, Cleveland, Chicago—transformed into industrial capitals. Immigration surged not because life was easy, but because life was possible; the American wage was the envy of Europe, and the American industrial job was the doorway to a better life.
This was not an accident. It was the practical expression of Henry Charles Carey’s “Harmony of Interests”—the belief that labor, capital, and landowners prosper together when a nation builds its productive capacity rather than outsourcing it. Carey argued that a strong manufacturing base creates a virtuous cycle: higher wages fuel domestic demand, domestic demand supports industry, and industry reinforces national wealth. Protection was not intended as a shield for inefficiency but as a scaffolding for growth—a way to ensure that the benefits of development diffused across society rather than concentrating in a few financial centers.
Carey’s vision parallels the Catholic understanding of the common good: the belief that labor and capital are not enemies, but partners, and that just economic structures align their interests rather than setting them against each other.
And Carey was right. During the high-tariff era, capital investment accelerated, wages climbed, and American workers gained unprecedented purchasing power. Domestic industry created stable employment, which strengthened families and rooted communities. What Carey had predicted—that national prosperity grows out of the alignment rather than the conflict of interests—became a lived reality for tens of millions.
For those who insist that tariffs harm the working class, this period stands as a direct refutation. The American middle class was not built in an era of unfettered free trade; it was built when the nation prioritized its own productive strength. Tariffs did not impoverish the United States. They helped finance the railroads, steel mills, chemical plants, foundries, and machine shops that formed the backbone of American prosperity.
Critics may argue that the world has changed, and it has. But the underlying principle remains: a nation grows wealthy when it produces abundantly, pays its workers well, and ensures that the fruits of development remain within its borders. That was true in Carey’s time, and it is true today.
Tariffs built the American middle class before—and they can help restore it.
IX. The Real Goal: Producing More at Home
Tariffs are often caricatured as a form of economic protection—an indulgence that allows weak industries to hide behind a wall rather than face the world. But this framing misunderstands both the purpose and the historical function of tariffs. Tariffs are not a cushion; they are a catalyst. They provide direction, discipline, and incentive—not comfort.
The real goal is not protectionism for its own sake, but production. A healthy nation must be able to produce what it needs—its steel, its medicines, its technologies, its critical components. Tariffs are one tool among many that push investment, capital, and innovation in that direction.
Properly designed, tariffs do not shelter inefficiency; they force modernization. Companies cannot rely on imported shortcuts. They cannot dump wages or outsource expertise. Instead, they must invest in new machinery, improve processes, train workers, and adopt advanced technologies in order to remain competitive within the domestic market. Far from weakening industry, this pressure strengthens it, just as resistance strengthens muscle.
Catholic teaching on subsidiarity insists that social and economic life should be rooted locally whenever possible. Tariffs, by reshoring production and strengthening domestic supply chains, help rebuild communities so that economic life flows outward from families and towns—not downward from distant global institutions.
Moreover, tariffs encourage geographically diverse economic growth. When production returns home, it does not concentrate exclusively in a handful of wealthy cities. It spreads across the interior of the country, revitalizing towns that once thrived on manufacturing but have since been hollowed out. Domestic production becomes not only an economic strategy but a social and geographic one, restoring balance to a nation that has become dangerously polarized between booming regions and declining ones.
In this light, tariffs are not an act of economic retreat; they are an act of national investment. They are part of a broader policy architecture that says: we will make things again, we will innovate again, and we will not leave our future in the hands of foreign powers or predatory labor systems.
The objective is simple and ambitious: to produce more at home, with higher wages, better technology, and greater national security. Tariffs are not the end—they are the spark.
X. Conclusion: Prosperity Is Made, Not Imported
For too long, the debate over tariffs has been framed as a debate about prices—a narrow calculation that reduces national prosperity to the cost of a shopping cart. But this framework misses the deeper truth. Tariffs do not function as a simple “poor tax,” nor are they a burden inevitably carried by those least able to afford it. The real-world evidence—from pricing behavior to wage dynamics to the lived experience of American communities—proves otherwise.
When firms face competitive limits, they cannot simply push costs onto consumers; they absorb them. When foreign exporters fight to keep their place in the U.S. market, they cut prices. When industries return home, wages rise, towns revive, and families gain the stability that comes from steady work. And when a nation rebuilds its productive base, it strengthens not only its economy but its security, its independence, and its moral integrity.
Catholic social teaching reminds us that an economy exists for the person, not the other way around. A nation that rebuilds its productive capacity fulfills not only an economic goal but a moral one: ensuring that families can thrive, communities endure, and the dignity of work is upheld.
True economic justice is not measured by the price of imported goods. It is measured by the ability of a people to support themselves through meaningful work, fair wages, and strong communities. A policy that restores domestic production is not a tax—it is an investment in national renewal. It is a commitment to ensuring that the prosperity of future generations is not outsourced to foreign powers or built on the exploitation of others.
If America is to rebuild its middle class, strengthen its workers, and restore its sense of purpose, it must recognize that prosperity is made, not imported. No nation ever consumed itself into greatness. Nations rise when they produce—when they invest in their own people, their own industries, and their own future.
Tariffs are not a tax on the poor—they are a shield for the working class.
Or, put more starkly: The price of cheap imports has been the disappearance of the American dream.
To reclaim that dream, America must once again become a nation that produces abundantly—and refuses to surrender its destiny to the lowest bidder.
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