President Donald Trump’s tariffs have already cost thousands of manufacturing jobs and are so unpopular that only three out of eight Americans support them. Yet he is doubling down on them, an act that a conservative economist described as literal “insanity.”
“Albert Einstein famously remarked that a sign of insanity was doing the same thing repeatedly and expecting a different result,” wrote American Enterprise Institute senior fellow Desmond Lachman, a former deputy director for the International Monetary Fund’s Policy Development and Review Department, in a Thursday editorial. “We must wonder what he might have made of the Trump administration’s import tariff policy.”
Lachman described how US trade representative Jamieson Greer announced Trump’s plan to levy new tariffs on dozens of countries, including a 50 percent import tariff on many Canadian products, even though Trump’s earlier tariffs did not achieve his stated goals.
“A key objective of Trump’s tariff policy was to eliminate the country’s large trade deficit and to increase manufacturing employment,” Lachman said. “Yet eighteen months into his second term, Trump’s tariff policy has failed to deliver on those objectives. For 2025, the trade deficit on goods and services remained virtually unchanged from the previous year’s level of $900 billion, while in the first half of this year the trade deficit has still been running at an annual rate of $700 billion. Meanwhile, far from increasing, manufacturing employment has declined by around 80,000 jobs.”
Ultimately, Lachman concluded that Trump made a mistake by not availing himself of an opportunity to back off his tariffs while saving political face.
“In February 2026, the Supreme Court offered Trump an off-ramp from his economically damaging import tariff policy when it invalidated his ‘liberation day’ tariff hike on grounds that he exceeded his emergency power authority,” Lachman argued. “Unfortunately, Trump has chosen not to take that off-ramp and has found other ways to impose new import tariffs. This policy is likely to add to inflation and to worsen our long run economic growth prospects. If the past is any guide, it will do so without delivering the purported objective of eliminating the trade deficit and increasing manufacturing employment.”
Speaking exclusively to AlterNet Ed Gresser, the Vice President and Director for Trade and Global Markets at the liberal-leaning think tank Progressive Policy Institute, agreed with most of Lachman’s position, although he pointed out one factual error.
“He's not correct about Albert Einstein,” Gresser told AlterNet. “That's one of those apocryphal quotes, often repeated, but it originated with a novelist, Rita Mae Brown, in the 1980s [from her novel "Sudden Death"],” Gresser said. “But otherwise, yeah, he's correct. They suppose Greer would say repeatedly doing the same things and expecting a different result is a sign of determination, persistence. But Lachman is right: The trade balance hasn't changed much. Manufacturing's share of GDP has dropped. Manufacturing employment, as he said, is a bit down.”
He continued, “The general economic recommendation for changing trade balances is you have to raise the savings rate relative to the investment rate. And if you're not doing that, then the trade balance won't change very much.” While Trump insists his tariffs will increase revenue, “you could make an argument that tariffs are a form of tax, and if you have higher tariffs, it does raise revenue. If you do it illegally [as the Supreme Court found in the case Lachman referenced], then you have to pay the money back, though. And in general, tariffs are a poor way of raising revenue. It's taxing poor people more than rich people, and goods-using businesses more than services and real estate and those sorts of things. So yeah, you know, I think he's right about that.”
Speaking with AlterNet earlier in July, a former top economic official for President Bill Clinton described how Trump’s tariffs are hurting America’s economy more broadly.
“It's about uncertainty,” former Undersecretary of Commerce for Economic Affairs Robert Shapiro told AlterNet. “Every investment is based on an assessment of the likely future demand for whatever you're investing in, and how much it's going to cost to produce it. So there are assumptions about labor costs, material costs and other input costs — and again, about demand. If you have a set of arrangements that give you some confidence about the price of your inputs coming from Mexico or Canada, or about demand for goods in Canada — and don't forget, we have virtually no trade deficit with Canada; we have enormous trade, and it goes in both directions — so it's certainly right, and it's not just about investments based on these probabilities that the trade agreement can help reduce uncertainty about.”
Shapiro added, “It's also about how much you're going to produce today, apart from investment, because you've got thousands of companies selling goods or services into Canada. And so there's uncertainty about whether this will lead to more conflict with Canada, which would hurt Canadian demand for US goods, or whether Canada will impose a new tariff in retaliation for ours that makes my goods less competitive there. Of course it's bad — it's bad for American workers, it's bad for American investment.”
