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Why Tariffs Deserve a Second Look
Joseph Ferrara
5 min read
Tariffs occupy a unique position in the U.S. government’s trade remedy toolbox. They not only generate revenue but also reshape trade, industry, and labor markets. In certain sectors, tariffs can have transformative economic effects, a critical point missing from the current heated political and economic debate.
In labor-intensive industries such as apparel manufacturing, tariffs make imported goods more expensive, leveling the playing field for domestic producers. For example, our company manufactures wool blazers and oxford dress shirts, relying on American labor. By raising the cost of competing imports from countries like China, Vietnam, Turkey and Portugal, tariffs give U.S. manufacturers a “home-team advantage” in competing for a share of the world’s wealthiest consumer market.
The contrast with Europe is striking. According to data from the European Commission and the WTO, 30 to 50 percent of clothing sold in the EU is still made within the 27-nation bloc, despite proximity to low-cost production hubs. In the U.S., by comparison, only 3 percent of apparel sold is made domestically. A robust tariff policy could revitalize American manufacturing, create jobs, and restore balance to the U.S. market.
Tariffs Boost the Economy While Addressing Global Inequities
Tariffs stimulate domestic manufacturing jobs, which in turn drive U.S. domestic production, exports, and consumer spending. For every 100 jobs added in manufacturing, an estimated $7 million in wages flows into the local economy annually. These wages support not only workers but also the retail sector, as better-paid workers become better customers.
As the CEO of an apparel manufacturing business, my company employs 120 skilled workers in New York City. For more than 35 years, we have specialized in producing high-quality, tailored products for major U.S. brands. Utilizing innovative technology and domestic labor has enabled us to survive in this highly competitive field; however, the pressure from low-cost, illegally subsidized, and unethically produced imports has constrained growth and threatened jobs. Tariffs could change this dynamic by incentivizing more products consumed by Americans to be proudly made by Americans.
Consider the economics: when an item that sells for $100 at retail is imported, the first cost—what manufacturers or intermediaries charge to retailers—is around $16. Tariffs are assessed based on this first cost from manufacturers, so applying a universal tariff of 20 percent—one proposal made by the Trump administration—would result in an additional tariff cost of $3.20 or 3.2 percent of the $100 retail price.
This is a modest cost increase that can easily be absorbed collectively by wholesalers and retailers, while the price for consumers would increase nominally, resulting in an item priced at $100 increasing to $103.20 at retail.
While a 3.2 percent shared impact across the retail value chain is minimal, the 20 percent tariff on the first cost has a huge net positive impact on the competitiveness of a domestic manufacturer competing against imports. Think of these terms: a 3.2 percent burden on the retail value chain enables a 20 percent boost in competitiveness for U.S. manufacturers. For a company such as ours, a 20 percent tariff boost would enable us to increase our labor force by 300 percent.
Retailers benefit directly from these manufacturing jobs and accompanying wages, as better-paid workers become better customers and bolster the economy. Yet one of the most confounding positions that persists in the public discourse over tariffs is opposition from the retail sector. Tariffs also address inequities in global trade. Countries like China and Bangladesh undercut American manufacturers by exploiting low wages and lax labor standards. Tariffs help level the playing field, enabling American workers and businesses to compete fairly. Through tariffs, we have the power to shift the advantage to “home team” domestic manufacturers.
Retailers Can Absorb Costs
Retailers often claim tariffs harm consumers, but evidence from past implementations disproves this narrative. The 2018 penalty apparel tariffs the U.S. imposed on Chinese imports of finished apparel, for instance, led to a modest 7 percent price increase between 2018 and 2024, yet sector sales grew by 22 percent during the same period.
In the apparel sector, where 97 percent of clothing sold in the U.S. is imported, tariffs can spur transformative shifts. An increase and shift from 3 percent to 10 percent of retail apparel sales to domestic production—roughly $35 billion—could create 1 million manufacturing jobs, tripling the sector’s workforce. Similar moves in industries like electronics, furniture, and automotive parts could deliver millions more jobs. Such a shift is easy to imagine, especially when considering our nearest comparison is with the European Union, which operates with upward of 30 percent of apparel products made within its borders.
Retailers’ concerns about modest price increases overestimate impacts on consumption while undervaluing nationwide job creation. Strengthening domestic manufacturing through robust tariffs delivers long-term economic benefits that far outweigh short-term adjustments for retailers and consumers. By leveling the playing field, tariffs uphold fair competition and the dignity of American-made products.
The Long-Term Benefits of Tariffs
Tariffs are not a panacea, but they are one of the few measures with direct, measurable benefits for American workers and industries. For too long, intermediaries and their retail partners have profited from cheap imports at the expense of U.S. manufacturing. By exposing intermediaries and rewarding companies that rely on domestic labor and materials, tariffs ensure that trade policy prioritizes the American worker.
The retail industry must rethink its priorities. Instead of lobbying against tariffs, retailers should recognize the long-term benefits of a robust domestic manufacturing base: more jobs, higher wages, and a stronger middle class. These are the very factors that drive consumer spending—and ultimately, retail success. Tariffs offer a pragmatic way for the U.S. government to level the playing field, giving American workers good-paying jobs and the U.S. economy a much-needed competitive edge.
Joseph Ferrara is the CEO of Ferrara Manufacturing, a maker of tailored clothing in New York City. Ferrara Manufacturing employs over 100 union workers and is proud to make clothing for the U.S. Military, the U.S. Olympic Team, and high-end brands.
