For decades, the United States has generally kept tariffs low and promoted free trade, but a few domestic industries have long been protected by import taxes and other trade barriers.
Now, as President Trump prepares to announce another big round of tariffs, these sheltered American industries offer clues about how those import taxes could work out for the rest of the country.
Trade barriers can prop up domestic industries. But they also raise prices, distort markets and leave the U.S. vulnerable when home-grown supplies run short. Here are three examples of how protectionist policies can lead to unintended consequences.
The not so sweet tax on sugar
For most of its history, the U.S. government has taken steps to support the home-grown sugar industry. The current sugar program was established in 1981, but its roots go back even farther — to the Cuban Revolution.
"Fidel Castro came in and took over," says Wes Peterson, an economist at the University of Nebraska at Lincoln. "And we cut all of our relations from Cuba," a major sugar supplier at the time.
To encourage more domestic sugar production, the government imposed strict limits on sugar imports. As a result, Americans now pay almost twice as much for sugar as people elsewhere around the world.
The absolute cost is still fairly low — about 38 cents a pound last year — so for most people, the trade barrier is easily overlooked.
"If you go the supermarket and buy five pounds of sugar, this is not going to break your food budget," Peterson says. "But if you're producing candy and your main ingredient is sugar, this is a big deal."
Searching for cheaper sugar elsewhere
Just ask Kirk Vashaw, CEO of the Spangler Candy company in Bryan, Ohio.
"It was founded by my great-grandfather in 1906," Vashaw says. "Dum-Dums is our flagship brand. We're the only candy cane manufacturer in the United States."
Sugar is the main ingredient in lollipops and candy canes, accounting for more than half the cost. So most of Vashaw's competitors have left the U.S. in search of cheaper sugar elsewhere. He understands that pressure.
"Chicago used to be the candy capital of the United States, and it's not any more. It's been hollowed out," Vashaw says. "If we were a public company, we would get closed down tomorrow and moved. But we're just doing our best to maintain our family business here in Bryan and support the community."
Vashaw's company supports more than 500 employees in Ohio, not to mention businesses that supply his machinery, packaging, and lollipop sticks — all of whom would likely feel more secure if sugar were cheaper in the U.S.
Customers who use sugar — meaning most Americans — far outnumber domestic sugar producers. But sugar producers still have a lot of political clout.
"It's a lot easier to organize to lobby the government if you're a fairly small, concentrated industry than if you're a large, diverse group of people like consumers," Peterson says. "Consumers always have a hard time getting organized whereas the producers are often very, very effective."
Policies that protect the domestic sugar industry have even outlasted Fidel Castro.
"One of the real problems with tariffs is that once they're in place, it's very hard to get rid of them, because you generate all these vested interests who want to maintain their protection," Peterson says.
The 'chicken tax' on pickup trucks
Tariffs and other trade barriers often outlive their original purpose. Back in the 1960s, for example, the U.S. was unhappy with a German tax on imported chicken, so in retaliation, policymakers imposed a 25% tariff on all imported pickup trucks.
That pickup truck tariff is still in place more than 50 years later. Until this week, it was ten times the tax on imported cars.
As a result, domestic carmakers have focused on building big pickup trucks that don't face foreign competition, while largely ignoring the more hotly contested market for sedans.
"This is one of the things that tariffs do: they distort markets," says Eugenio Aleman, chief economist at Raymond James, a financial services firm. "The distortion that has been created by this 25% tariff on light trucks is that the U.S. auto industry doesn't want to produce smaller, cheaper cars."
Businesses that benefit from protectionist policies often have less incentive to invest, invent and compete on the world stage. While building big pickup trucks has been very profitable for U.S. automakers here at home, there's not much market for those vehicles elsewhere around the world.
"Have you seen the roads in Europe?" Aleman says with a chuckle. "These are very old cities where American cars cannot turn the corner because they are so big that it's impossible."
Babying the formula makers
Tariffs aren't the only way to restrict imports. Government regulations and "Buy American" programs can have a similar effect.
The U.S. charges a 17% tariff on imported baby formula, but nutritional labeling requirements and a subsidized program for low-income families also serve to limit foreign competition.
The government's Special Supplemental Nutrition Program for Women, Infants and Children (WIC) buys about half the baby formula in the U.S., awarding regional monopolies to a handful of large suppliers.
"The thing that really complicates it and would make it really hard for even a U.S. producer who's small to crack into the market is the WIC program," says Mary Sullivan, a visiting scholar at the Regulatory Studies Center at George Washington University.
That proved to be a liability in 2022, when an Abbott factory in Sturgis, Mich. that supplied about 20% of the nation's baby formula was shut down due to contamination. Nervous parents around the country were suddenly faced with empty store shelves.
Eventually, the shortage was relieved with the help of imported baby formula, but only after a months-long delay while government restrictions were relaxed.
It's a reminder that sometimes the most reliable supply chain is not necessarily home-grown.
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