Home Grown Production Lowers Cost, Increase Wages and Jobs
In today’s globalized economy, consumers are conditioned to seek the lowest possible price — often by purchasing imported goods. Policymakers, pundits, and multinational corporations often warn about tariffs. They claim tariffs are inflationary. They warn that tariffs increase costs for consumers and disrupt supply chains. Tariffs can create short-term price increases on specific imports. Yet, a more dangerous source of long-term inflation is from not using tariffs. It results from the unchecked importation of foreign goods.
This sound counterintuitive. After all, imported goods are often cheaper than domestic alternatives. But many overlook the systemic inflationary pressure caused by outsourcing production. It undermines domestic supply. Additionally, it increases dependency on foreign markets.
Here’s why buying from outside your country can be more inflationary than imposing tariffs:
1. Foreign Dependency Weakens Domestic Supply Capacity
When a country relies too heavily on imports, it neglects its own industrial base. Factories close, workers are laid off, and entire supply chains atrophy. Over time, this reduces the nation’s capacity to produce goods. When demand surges, producers can’t fill the gap. This also happens during global disruptions, like COVID-19. This leads to supply shortages — one of the primary causes of inflation.
Tariffs, on the other hand, can stimulate local production by making it profitable again for businesses to manufacture domestically. This builds resiliency and reduces inflationary pressure in the long run.
2. Low-Cost Imports Drive Out Local Competition, Then Raise Prices
Initially, imported goods seem to offer lower prices — but those prices often don’t show true economic cost. Foreign producers get subsidies, exploit labor, or manipulate currency to undercut domestic businesses. Once the local competition is eliminated, foreign suppliers often raise prices. This creates a monopoly effect in essential industries, allowing outside producers to inflate prices with little recourse for domestic consumers.
Tariffs can act as a shock absorbed to prevent this market manipulation. They level the playing field for local producers. Tariffs encourage price stability through healthy competition.
3. Trade Deficits Are Inflationary by Nature
When a country consistently imports more than it exports, it runs a trade deficit. To fund this, it must borrow more or print more currency — both of which can drive inflation. The loss of jobs and productive capital from offshoring further weakens the domestic economy. This creates a vicious cycle. There is a higher dependency on imports. There is also lower production capacity, and the currency is increasingly under pressure.
Tariffs encourage domestic production and reduce trade deficits. These actions help preserve the value of the national currency. They also protect against inflationary devaluation.
4. Increased Domestic Production Reduces Inflation Over Time
When production happens at home, it keeps money circulating within the domestic economy. Workers earn wages, businesses earn profits, and governments collect taxes — all of which reinforce economic growth. As production volumes increase, the fixed costs per item decrease due to economies of scale. This means that over time, the cost to produce each extra unit goes down, leading to lower prices for consumers.
In short, building products at home doesn’t just protect against inflation. It actively reduces it as supply expands. Productivity also improves.
5. Tariffs Encourage Reinvestment in the Local Economy
Revenue from tariffs doesn’t vanish — it goes to the government, which can reinvest in infrastructure, manufacturing, and innovation. This increases the nation’s productive capacity. Buying from foreign producers sends dollars out of the country, enriching other nations while weakening your own.
By encouraging consumers and businesses to buy local, tariffs keep more money circulating domestically. This strengthens economic velocity. It also reduces the need for inflation-fueling monetary stimulus.
6. Global Shocks Make Imports Unreliable and Costly
Geopolitical tensions, pandemics, shipping delays, and supply chain breakdowns all show that global dependence is a liability. When foreign producers face disruption, domestic consumers are left scrambling — and prices spike. The 2021 chip shortage, the 2022 fertilizer crisis, and the COVID-era PPE shortages all prove this point.
Tariffs can encourage a degree of strategic autonomy, reducing the volatility that global reliance introduces into domestic price systems.
Conclusion: Reframe the Debate
Tariffs are not the enemy of the consumer — dependency is. Tariffs increase specific prices in the short term. They work to anchor price stability by rebuilding domestic production. They help reduce external vulnerabilities. Tariffs also keep value inside the national economy.
By contrast, unfettered importation drains wealth. It hollows out industries and leaves economies vulnerable to foreign shocks. These effects are far more inflationary in the long run.
In truth, the real cause of modern inflation isn’t tariffs. It’s the loss of economic sovereignty — and the answer lies in rebuilding it. Reinvesting in domestic manufacturing will help lower inflation over time. Supporting local producers is also essential. Enacting smart, protective trade policies will further restore prosperity where it belongs: at home.
