Top economist admits Trump “outsmarted us all” with his controversial tariff policy as manufacturing jobs surge and blue-collar wages rise despite dire warnings from Wall Street.
Key Takeaways
- President Trump’s tariff strategy, initially criticized by economists, has shown unexpected success in protecting American jobs and boosting manufacturing.
- Manufacturing employment has increased, and blue-collar wages have risen as a direct result of the tariff policies.
- The 10% global tariff and 145% China-specific tariff are projected to generate approximately $400 billion in annual revenue for the U.S. Treasury.
- Wall Street analysts and economists are revising their positions, with some admitting Trump’s approach may have been more strategically sound than initially thought.
- While tariffs have caused market disruptions, they have fundamentally reshaped how trading partners view America’s economic strength.
Economic Experts Reverse Course on Tariff Effectiveness
President Trump’s aggressive tariff policy, once derided by economic experts as a dangerous and misguided approach to international trade, is now being reassessed as potentially brilliant strategic maneuvering. The policy, which imposed significant tariffs on imports from China and other countries, was designed to protect American manufacturing and create leverage in trade negotiations. What many critics failed to anticipate was the positive impact these measures would have on domestic employment, particularly in the manufacturing sector, where job growth has exceeded expectations despite warnings of economic calamity.
“This would seem like a victory for the world, and yet would produce $400 billion of annual revenue for US taxpayers. Trade partners will be happy with only 10% tariffs, and US tax revenue will go up. Maybe the administration has outsmarted all of us,” said Torsten Sløk, an economist.
The administration’s decision to maintain a baseline 10% global tariff while increasing China-specific tariffs to 145% has created a new trade paradigm. While these measures initially created uncertainty in markets, they have also generated substantial revenue for the federal government. According to the Tax Foundation, tariffs will increase federal tax revenues by $156.4 billion in 2025 alone, representing the largest tax hike since 1993. This revenue stream comes primarily from foreign producers who must now pay a premium to access American markets.
Manufacturing Renaissance and Wage Growth
One of the most significant outcomes of Trump’s tariff strategy has been its impact on American manufacturing. Contrary to predictions that tariffs would devastate U.S. industry, many domestic manufacturers have seen renewed vitality. The protection afforded by tariffs has encouraged companies to invest in American facilities rather than outsourcing production overseas. This shift has not only created jobs but has also put upward pressure on wages for blue-collar workers, a demographic that had seen stagnant wage growth for decades before these policies.
“Extending the deadline one year would give countries and US domestic businesses time to adjust to the new world with permanently higher tariffs. It would also result in an immediate decline in uncertainty, which would be positive for business planning, employment, and financial markets,” said Torsten Sløk, economist.
The manufacturing sector’s revival represents a direct challenge to the economic orthodoxy that had dominated Washington policy circles for decades. While traditional economic theory emphasized the benefits of free trade and globalization, it often overlooked the concentrated harms these policies could inflict on specific communities and industries. Trump’s approach, by contrast, prioritized the protection of American workers and industries even at the cost of some economic efficiency, a tradeoff that appears to be paying dividends in terms of job creation and wage growth.
Navigating International Retaliation and Legal Challenges
Despite the domestic economic benefits, Trump’s tariff policies have not been without challenges. China, Canada, and the European Union have all implemented retaliatory tariffs affecting approximately $330 billion of U.S. exports. These countermeasures are projected to reduce U.S. GDP by an additional 0.2 percent, according to the Tax Foundation. Additionally, the U.S. Court of International Trade ruled in May 2025 that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, creating uncertainty about the future of some tariff measures.
“The court order makes tariff scenarios murkier in the short term,” said Bruce Kasman, an economist.
However, the U.S. Court of Appeals has allowed the IEEPA tariffs to remain in effect pending a final court decision, providing temporary stability to the administration’s trade policy. This legal battle highlights the complex interplay between executive authority and judicial oversight in the realm of international trade policy. Despite these challenges, the administration has maintained its commitment to using tariffs as a tool for protecting American industries and workers, arguing that the economic benefits outweigh the costs of international retaliation and legal uncertainty.
Long-term Economic Implications
While the short-term benefits of tariffs are becoming evident, economists continue to debate their long-term implications. The weighted average applied tariff rate on all imports has risen to 16.1 percent, the highest since 1941. This significant shift in trade policy represents a fundamental rethinking of America’s approach to globalization and international commerce. Rather than pursuing ever-greater integration with global markets regardless of the consequences for American workers, the administration has prioritized national economic interests even when they conflict with traditional free-trade orthodoxy.
“A tariff rate permanently at 5% would imply a material upgrade to our growth forecast for the second half of 2025, and would likely reduce our 2025 core CPI forecast by close to a percentage point,” said Abiel Reinhart, economist.
The administration’s willingness to use tariffs as a negotiating tool has also changed how other countries approach trade negotiations with the United States. Rather than assuming American markets will remain perpetually open regardless of trade imbalances or unfair practices, foreign governments now recognize that access to U.S. consumers comes with expectations of reciprocity and fairness. This shift in perception may ultimately lead to more balanced trade relationships that better serve American economic interests while still maintaining the benefits of international commerce.
