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Tariffs versus subsidies: protection versus industrial policy

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  • Rickard, Stephanie

Abstract

In 2025, the United States raised tariffs to rates not seen for more than a century. These tariffs were not part of a carefully designed industrial strategy. Instead, the second Trump administration distanced itself from existing industrial policy initiatives and indicated a desire to roll back government-funded subsidies for businesses. This article examines the rationale behind the United States’ pivot from subsidies to tariffs and explores implications for trade partners and multilateral institutions.

Suggested Citation

  • Rickard, Stephanie, 2025. "Tariffs versus subsidies: protection versus industrial policy," LSE Research Online Documents on Economics 128326, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:128326
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    File URL: http://eprints.lse.ac.uk/128326/
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    References listed on IDEAS

    as
    1. Wolfgang Mayer & Raymond Riezman, 2013. "Voter Preferences for Trade Policy Instruments," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 11, pages 169-183, World Scientific Publishing Co. Pte. Ltd..
    2. Michele Ruta & Monika Sztajerowska, 2025. "Shifting Advantages: Do Subsidies Shape Cross-Border Investment?," IMF Working Papers 2025/080, International Monetary Fund.
    3. Bruce A. Blonigen, 2019. "Tariff-Jumping Antidumping Duties," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 5, pages 179-203, World Scientific Publishing Co. Pte. Ltd..
    4. Baldwin, Robert E, 1989. "The Political Economy of Trade Policy," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 119-135, Fall.
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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