Rerouted, Regressive, Unreshored

The first tariff piece on this site was a snapshot — effective rates, sector exposure, the SCOTUS ruling. This is the structural analysis. Not where tariffs stand, but what they did. The evidence from 2025 is now comprehensive enough to assess all three of the administration's stated goals: reducing the trade deficit, protecting consumers, and reshoring manufacturing.

The answer to all three is no.

China's share of US imports dropped below 10% in 2025 — down from nearly 22% before the first trade war in 2018. By that metric, decoupling worked. But the trade deficit didn't shrink. Total US merchandise imports actually rose. The goods just changed addresses.

Vietnam, Mexico, Taiwan, and India absorbed most of the reallocation. A CEPR analysis of trade data shows this was less diversification than deflection — the same Chinese-manufactured goods flowing through intermediary countries.

The scale of transshipment is staggering. A Harvard/Dartmouth study found that Chinese-owned firms established after the first tariffs account for over half of Vietnam's export growth to the US. Over $8 billion in Chinese goods were rerouted through Vietnam in the first three quarters of 2025 alone.

The administration recognized this. In July 2025, goods “transshipped” through Vietnam were hit with a punitive 40% tariff — double the base rate. Enforcement proposed a near-zero tolerance standard: goods with as little as 1% Chinese-origin content could be flagged. This turned Vietnam from a tariff beneficiary into a compliance risk overnight.

“Countries are paying us hundreds of billions of dollars.” That was the claim. The NY Federal Reserve put the actual number at 10%. Foreign exporters absorbed roughly a dime of every tariff dollar. Americans paid the rest.

This wasn't a surprise. The academic literature from the first trade war (Amiti, Redding, and Weinstein 2019) found near-complete pass-through. The 2025 data confirmed it at scale: the largest tariff increase as a share of GDP since 1993.

The Yale Budget Lab estimates an average household cost of $1,500 per year. But that average masks extreme regressivity.

The cheapest product categories saw the steepest increases. A St. Louis Fed analysis found that the cheapest product varieties saw 5% price increases — double the rate of premium goods. Apparel prices rose 17%. Food prices rose 2.8%. The goods most consumed by low-income households are the goods most subject to tariffs.

The promise was simple: tariffs make foreign goods expensive, American factories become competitive, manufacturing jobs come home. Nine months after Liberation Day, the data shows the opposite.

The gap between announcement and delivery is extraordinary. The Kearney Reshore Index fell 300+ basis points into negative territory. The ISM December 2025 survey found 64% of manufacturers have no plans to reshore. Not “delayed” — no plans.

Three structural barriers explain why:

Nobel laureate Joseph Stiglitz warned in February 2026 that blue-collar job loss is now among the biggest threats to the US economy. Rather than reshoring, manufacturers are choosing the cheaper path: 32% plan to pass all tariff costs to consumers as price hikes. Another 42% use a combination of price hikes and cost absorption. Only 36% are even looking at domestic production.

Tariffs in 2025 did not reduce the trade deficit, did not protect American consumers, and did not bring manufacturing jobs home. They rerouted trade flows through intermediaries, imposed a regressive tax that hit the poorest households hardest, and created a reshoring narrative that 98% of companies have not acted on.

This matters beyond the specific policy. The tariff experiment is the clearest test case in modern economics of whether unilateral trade barriers can restructure a $27 trillion economy. The evidence says they restructured trade routes, not trade patterns. The goods still flow. Americans still pay. The factories aren't coming.

What would actually bring manufacturing back? The Cleveland Fed and Deloitte agree: a sufficient workforce would do more than any tariff, subsidy, tax cut, or regulation change. The bottleneck isn't price competitiveness. It's people.