White House doubles down on tariffs despite voter backlash

The White House vowed to press ahead with tariffs one week after voters punished Republicans over rising prices in the midterm elections, CNBC reported.

Jim Goyer, Trump’s director of the White House Office of Public Liaison, defended tariffs as a tool to rebuild U.S. manufacturing and secure supply chains during an address Tuesday at the B20 summit in Washington. “And we are just getting started,” Goyer said. “Our ambition is to continue this pace for the remainder of the president’s term in office.”

But Gary Cohn, who served as Trump’s chief economic advisor during his first administration and is now vice chairman of IBM, offered a sharply different assessment. “Tariffs are a consumption tax on the U.S. consumer,” Cohn said during an onstage interview at the same summit. He argued that the duties are raising prices and forcing Americans to reconsider purchases. “You’re looking at one side of the equation,” Cohn said. “There’s the debit side of the balance sheet, which is every hardworking American who happened to pay the tariff through some product that they bought.”

The political backlash was visible in the election results. Roughly two-thirds of voters said Trump’s policies contributed to inflation, according to the CNBC Voter Poll. Nearly nine in 10 said the cost of living was a major or decisive factor in their vote. A separate Reuters/Ipsos poll released Tuesday found 62% of Americans support repealing Trump’s tariffs, while just 21% approved of his handling of the cost of living.

New government data added to the pressure. Consumer prices rose 0.4% in October, exceeding economists’ expectations. Annual inflation reached 3.7%, well above the Federal Reserve’s 2% target. Tariffs are not the only driver. The war with Iran has pushed energy costs higher, and housing and healthcare expenses continue to strain consumers. But a Federal Reserve Bank of New York study estimated that about 26% of tariff increases were passed through to consumer prices, with some effects taking nine to 12 months to work through supply chains.

Kevin Brady, a former Republican congressman who helped lead the B20 summit, said the global trading system that existed before Trump is not coming back. “President Trump has disrupted that system in a way that we’re not likely to return to,” Brady said during a discussion with U.S. Chamber CEO Suzanne Clark. Clark told the summit: “Last week, American voters sent a clear message about the cost of living and their economic security.”

For businesses, the shift is already underway. UPS CEO Carol Tomé said customers are moving production and sourcing closer to home. “Supply chains are diversifying. Supply chains are regionalizing,” Tomé said during a panel discussion. UPS is opening a new $80 million-plus air hub in the Philippines to expand its Asian network across more than 1,100 global trade lanes. Jim Fitterling, executive chairman of Dow, defended tariffs despite their costs, arguing they are necessary to combat unfair competition and protect U.S. manufacturing.

Cohn saw room for a bipartisan trade deal. He suggested Trump and the incoming Democratic Congress could make protections against China and unfair trade practices permanent while rolling back tariffs on Canada. Democrats plan to challenge Trump’s tariffs when they take control of Congress in January, but his veto power and broad trade authority could make them difficult to overturn.

What I think

The White House is making a political calculation that may be economically defensible but is politically reckless. Tariffs do generate revenue and can protect specific industries. The New York Fed’s finding that 26% of tariff costs pass through to consumers means the other 74% is absorbed by importers and foreign producers, which is not nothing. But the 26% that hits consumer prices is the 26% that voters feel every time they buy groceries, electronics, or auto parts, and voters just told the Republican Party what they think about that.

Goyer’s “we are just getting started” is the kind of statement that sounds strong in a conference room and reads like a threat on a ballot. The midterms were a referendum on prices, and the referendum produced a Democratic Congress. Doubling down on the policy that voters blamed for higher prices is not a strategy for winning the next election. It is a strategy for proving that the administration was not listening.

Cohn is right on the economics and wrong on the politics. Tariffs are a consumption tax. They raise government revenue at the expense of consumer purchasing power, and the incidence falls hardest on lower-income households that spend a larger share of their income on tariff-affected goods. But Cohn’s suggestion of a bipartisan deal that keeps China tariffs and rolls back Canada tariffs assumes that Trump is willing to compromise, and the White House just said it is not. The administration’s position is that tariffs are working and should be expanded. A compromise requires both sides to move, and only one side is showing any interest.

The supply chain reshuffling that Tomé describes is the real and lasting effect of the tariff policy. Companies are moving production closer to home regardless of what happens to the tariffs, because the uncertainty is itself a cost. A manufacturer that builds a factory in Vietnam under the assumption that tariffs will stay in place faces the risk that a future administration removes them. A manufacturer that builds in Mexico or the U.S. faces no such risk. The tariffs have accelerated nearshoring, and that acceleration will continue even if the tariffs are repealed. The policy has already achieved its structural goal, which is to rearrange global supply chains.

The question is whether the rearrangement is worth the price. The Federal Reserve study says 26% of tariff increases pass through to consumers. That is a measurable, quantifiable cost. The benefit is harder to measure: manufacturing jobs created, supply chain resilience gained, bargaining power over trading partners achieved. The administration argues the benefits exceed the costs. The voters disagree. In a democracy, the voters get the last word, and they spoke on Nov. 3. The White House can press ahead with tariffs, but the incoming Congress will try to stop them, and the next election will settle who was right.