Tariffs Backfire: How Trade Policies Intended to Protect U.S. Manufacturers Are Creating Challenges

For 75 years, Dan Digre’s family business has produced speakers in Minnesota, enduring as many U.S. competitors closed factories and shifted operations to Asia.

MISCO, the company led by Digre, represents the type of American manufacturing that trade policies seek to protect. However, since tariffs on Chinese imports were implemented in 2018 to support domestic producers, MISCO has had to relocate some manufacturing overseas. The increased cost of imported components due to tariffs has made overseas production more financially viable.

Digre’s experience highlights a key challenge of broad tariffs designed to raise prices on foreign goods and encourage domestic purchasing. While some manufacturers have benefited by competing against cheaper imports, others with global supply chains face difficulties.

Heavy tariffs are disrupting companies that depend on international suppliers and markets, potentially undermining the intended benefits of these trade measures. This dynamic risks harming smaller manufacturers and exerting downward pressure on the broader U.S. economy.

MISCO has traditionally manufactured speakers in Minnesota for export, including shipments to a major Canadian customer. The company relies on certain components sourced exclusively from China. Due to a 55 percent tariff on these imports, producing domestically for that customer is no longer economically viable. Consequently, production has shifted to a Chinese factory that can export directly to Canada, bypassing the U.S. market.

Digre points out the irony that material tariffs on Chinese parts are higher than those on finished speakers imported from China or Vietnam, which discourages domestic manufacturing despite the policy’s protective aims.