The tariffs announced and implemented by the current administration are expected to have wide-ranging effects on the US economy. Of particular concern are their likely impacts on workers, who are expected to bear some of the most significant costs of the new tariffs . This economic damage is particularly significant because it risks reinforcing the democratic backsliding currently underway in America. In this brief, we examine how trade and tariff policy influence US workers’ ability to access good-paying jobs and achieve economic stability, and how economic insecurity connects closely to democratic instability.

Why This Matters

Policymakers and society face a challenge: On the one hand, the tariff regime now being pursued is unlikely to address the fundamental problems workers face in the labor market. On the other hand, the failure of economic policy to respond to the unequal gains—and real harms—from liberalized trade left many workers behind, contributing to an anti-democratic turn in American politics. A new direction is required to achieve better outcomes for workers and avoid intensifying the crisis of democracy facing the country today. This will require an integrated approach to trade policy, economic policy, and labor market policy.

What We Found

Contemporary trade policy debates demonstrate the link between economic and democratic outcomes: Past trade policy contributed to poor economic outcomes for some workers, which has had political consequences including the rise of anti-trade sentiment and contributing to a broader loss of trust in democracy. However, while past patterns of trade hurt some workers, it does not follow that high tariffs and lower trade will improve outcomes for workers now. Reviewing recent research, we find that:

• The trade policy of the current administration represents a dramatic break from prior consensus, setting effective tariff rates higher than at any point in nearly a century and implementing these measures in a manner that creates an unusually high degree of trade policy uncertainty.
• These new tariffs are expected to have widespread negative effects on the US economy and labor market. Workers will be less well off in the near term, as the tariffs reduce real earnings and depress employment. Over the longer term, we project the tariffs may suppress long-term wage growth, leading to a reduction of about $1,400 in income per worker annually by 2035.
• Past trade policy also contributed to poor economic outcomes for some workers, with broader political consequences. The backlash against free trade is one factor fueling support for populist candidates, some of whom espouse anti-democratic messages.

Fortunately, lessons from this experience also show a path forward that can deliver better results for workers—and help workers see how the economy can work for them. This, in turn, could strengthen support for American political institutions. This new direction includes trade policy that employs more targeted and strategic tariffs; economic policy that better offsets the economic shocks of dislocation; and labor market policy that more effectively protects and empowers workers.