Not all tariffs are created equal. Some are targeted for foreign policy goals. Other tariffs are to leverage better trade deals. And another reason is to spur domestic manufacturing. I believe all tariffs are an unnecessary interference in commerce between consenting parties, but my opinion is not the prevailing one with politicians today.
The problem is that some tariffs actually hurt domestic manufacturing. There are tariffs that don’t impact domestic manufacturing, but many companies import materials that they use to manufacture end products. Every car on the road today is built with steel and imported parts. Pharmaceutical ingredients to make prescription drugs are frequently sourced from abroad. Although we produce increasing amounts of oil and gas every year, the United States needs imported equipment to refine fuel. There are many domestic manufacturers that import products that they use to make larger products like cars and airplanes.
President Donald Trump’s laudable push to increase domestic manufacturing is impeded by tariffs that hit these industries.
Take the proposed tariff on semiconductors using Section 242 of the Trade Expansion Act would hammer semiconductors with a tariff on all imports. As the Information Technology and Innovation Foundation explains, “semiconductors serve as the computational backbone of the digital age, providing the processing, memory, sensing, and power-management capabilities that support artificial intelligence, advanced manufacturing, telecommunications, and other technology-intensive sectors of the economy.” They estimate a hit to the economy, with a decrease in GDP of $1.6 trillion, or 3.9% of GDP, if these tariffs are implemented and remain in effect for 10 years.
If the goal of tariffs is to increase productivity, it does not make economic sense to tax the inputs American companies need to produce the goods and services that have made the American economy the most productive in world history. Our economy is being driven by a new age of technology, with prominent companies leading the world in communications technology. An increased cost on semiconductors should be avoided at all costs to prevent other nations from overtaking the U.S. in the services space. While the U.S. may have an overall trade deficit, our nation leads the world in service exports, including business services, financial services, and travel.
Some organizations recognize the problems created by tariffs on input manufacturers who need to compete in a competitive world market. The U.S. Chamber of Commerce urged on Jan. 28, 2026, that the Trump administration “grant exclusions for small businesses, for products not readily available from domestic sources, and in instances where tariffs threaten American jobs.” The exclusions should extend from small to large companies that rely on inputs sourced from foreign nations to manufacture in the U.S.
Any analysis of proposed tariffs should include the disruption it could impose on consumers and American manufacturing. The U.S. is not a tropical country, and tariffs on spices, coffee, bananas, and cocoa will not spur domestic production of these crops. This is not a direct analogy, but think about gas and diesel prices today, the increased cost of fuel is hitting American consumers hard, because transportation hits anybody with a car and increases the cost of products that are subject to shipping costs. The bottom line is that any policy that increases costs on consumers and restricts manufacturing access to inputs makes no economic sense.
If politicians are worried about the national security implications of importing semiconductors, they should assess the decrease in security because of our military having less access to what they need for communications networks that serve military purposes. If the goal is to insource all semiconductor manufacturing, that is not going to happen overnight. What are consumers going to do if they are shut off because of high costs while we wait years for the domestic manufacturing of semiconductors to hit critical mass?
WE’RE RUNNING OUT OF MISSILES. TRUMP’S TARIFFS WON’T SAVE US WITHOUT AI FACTORIES
There are tariffs that many believe will move the ball forward on insourcing domestic manufacturing, but a hike in semiconductor tariffs is not one of them. Tariffs increase costs to dissuade individuals and corporations from purchasing imported products. This is a problem when those products are not sourced domestically while also being a critical part today of the engine of our economy.
The consequences of a high semiconductor tariff will be decreased productivity of the American economy and less disposable income for American consumers. Not a good outcome.
Brian Darling is former counsel for Sen. Rand Paul (R-KY).