I learnt something new listening to the excellent podcast ‘If You’re Listening’.

We all know the talk of the day is tariffs and the potential economic impact of Donald Trump’s impending plans.

After World War II, the majority of developed countries slowly got rid of major tariffs and embraced free trade. An exception was Australia. Australia kept high tariffs right up until the 90s in order to protect Australian manufacturing.

One result was that Australians didn’t get colour TV until 1974. 20 years behind the U.S and years behind many other countries.

In 1973, tariffs on foreign-made TVs were at 180%. Due to concerns about rising inflation, Prime Minister Whitlam asked the National Tariff Board to review the situation, and by the time that colour TV was introduced, he had dropped the tariff to 35%.

At the time, the biggest electronics company in Australia was AWA. In fact, from the late 30s to the late 50s, AWA’s headquarters was the tallest building in Australia. AWA thrived with the help of the Australian government. The Australian government wanted a domestic electronics industry and everyone wanted to protect Australian jobs.

The thing is, anyone with an inkling of knowledge about economics knows that the cost of production is largely driven by two factors: labour costs and economies of scale - the more you sell, the less it costs to produce per item.

In the 1970s, the population of Australia was 13 million - a small market. Australia also had higher labour costs than Asian countries. You can see the problem here. Even with tariffs set at 35%, AWA could no longer compete with Asian competitors.

By the end of 1975, AWA had laid off 2,000 factory workers. The industry was in a nosedive and it was a sign of things to come for Australian manufacturing in general. Throughout the 80s and 90s, one by one, the tariffs were dropped. And one by one, the industries they had been protecting disappeared.

A similar story has played out in many developed western countries, including the UK, and significantly, the U.S. We all now pay a lot less for goods, but the cost has been the loss of many blue-collar jobs and industries, and a rising wealth gap between rich and poor.

This sets the scene, perversely, for Donald Trump’s election in 2016. He promised to bring back manufacturing jobs, particular in those Rust Belt states that ultimately helped him win the election.

Then, and now, he has repeated the mantra that Americans were being ripped off by foreign countries, and tariffs would force them to pay. This is despite the fact that we know, and he knows, and I’m sure even the MAGA cult knows, that tariffs are paid by importers, not by the foreign companies selling into America.

In his first term, economists estimate that Trump’s tariffs cost American consumers $72 billion in the first year alone.

So the price of goods went up, but did he fulfil his promise by bringing manufacturing jobs back to America?

Well, in a lot of cases the plan backfired.

The Federal Reserve found that Trump’s 25% tariff on steel, for instance, raised costs for American factories that relied on imported steel and led to a net loss of 76,000 jobs.

You can’t think that what worked prior to the 80s will work in 2025. The global economy is tightly integrated. Almost every complex product in the world has components coming from different countries. For instance, there’s not a single US-made TV that doesn’t have components from China, Mexico or elsewhere.

As for income inequality, In 1980, Americans with degrees used to earn 40% more than those without degrees. Now it’s 80% more, and it’s largely these people without degrees who have now, twice, elected Donald Trump to fix the problem.

As the podcast points out, if Trump targeted tariffs at specific products and industries, it might incentivise companies to open factories in America. It would mean higher prices for certain products, but that may be a price that Americans are willing to pay to bring manufacturing jobs back to America. However, the 2025 version of Trump tariffs are not targeted. The world’s largest economy is on the path of implementing broad sweeping tariffs against anyone and everyone. It’s going to have ramifications for us all.