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A Closer Look at US Tariffs’ Social Performance

Mariano Bernardez
2 days ago
5 min read

Updated: 1 day ago

By Mariano Bernardez

In the gospel of globalization, tariffs are the original sin. They began as defensive moats for fledgling American industries but have morphed into blunt instruments of economic nationalism—especially in the populist resurgence under Trump (2016–2020). This piece dissects the social performance of US tariffs through the triadic lens of interpersonal, transactional, and institutional dimensions, drawing from historical patterns and contemporary evidence.

The Original Sin: A Historical Note on US Tariffs

Tariffs built America—and then nearly broke it.

From Alexander Hamilton’s 1791 “Report on Manufactures” to the infamous Smoot- Hawley Tariff Act of 1930, protectionism was pitched as a developmental shield. Initially, it helped protect nascent industries.

But by the 20th century, tariffs increasingly acted as fiscal sedatives for political gain, dulling firms' competitive edge and inflaming international tensions. Smoot-Hawley, for example, contributed to a 66% drop in global trade between 1929 and 1934 and arguably deepened the Great Depression (Eichengreen & Irwin, 2009).

Fast forward to 2016: Trump enters office with a campaign pledge to restore American manufacturing.

Enter the tariff wars.

Transactional Performance: The Broken Chains of Commerce

Tariffs, as economic “antibodies,” can trigger autoimmune reactions. Trump’s tariffs—especially on steel, aluminum, and Chinese goods—were billed as "America First" maneuvers.

The outcome? A cascade of adverse transactional outcomes:

Supply Chain Disruption: US manufacturers reliant on intermediate goods from China and Europe saw input costs surge. The auto sector, notably, bore the brunt. Ford estimated a $1 billion loss in 2018 due to steel and aluminum tariffs (CNBC, 2019).
Stock Market Volatility: Trade war escalations routinely wiped billions from US equity markets. Each tweet from the White House had more influence on volatility than central bank announcements.
EFI & DBR Rankings: The US dropped from 6th to 8th in the World Bank’s Doing Business Rankings during this period. Foreign Direct Investment (FDI) fell by 37% between 2016 and 2019 (UNCTAD, 2020).
Recession Signals: The inverted yield curve of 2019—often a harbinger of recessions—was partly driven by fears of protracted trade wars.
Trade Deficit: Ironically, the US-China deficit increased, not decreased, peaking at $420 billion in 2018 (US Census Bureau, 2020).

If trade is a circulatory system, tariffs are clots that threaten a stroke.

Interpersonal Performance: When Protectionism Turns Personal

Tariffs are more than taxes on goods; they are symbols. They perform political theater—pitting “us” against “them.” This had consequences:

Xenophobia & Distrust: Tariff rhetoric amplified anti-Asian sentiment. Hate crimes against Asian Americans surged by 149% in 2020–2021 (Center for the Study of Hate and Extremism, 2021).
Brain Drain & Talent Loss: Foreign graduate STEM enrollments fell sharply after 2016. International student enrollment dropped by 17% between 2016 and 2020 (Institute of International Education, 2021).
Broken Leadership Bonds: CEOs and industry leaders publicly split from the administration. Tesla, Apple, and even Harley-Davidson decried tariffs. Trust between public leadership and business was fractured.

From a Balanced Social Performance (BSP) lens, this represents a failure in interpersonal performance, where trust, collaboration, and emotional intelligence dissolve in favor of suspicion and transactional nationalism (Bernardez, 2023).

An essential failure of diplomacy can make global tariffs backfire.

Here are five authoritative definitions of diplomacy, each from a distinct academic or institutional source

“The conduct of relations between sovereign states through the medium of officials based at home or abroad”

— Sir Ernest Satow

Satow, E. (1979). Satow's Guide to Diplomatic Practice (5th ed., edited by Lord Gore-Booth). London: Longman.

“The art of conducting negotiations between nations; skill in handling affairs without arousing hostility”

— Merriam-Webster Dictionary

Merriam-Webster. (n.d.). Diplomacy. In Merriam-Webster.com dictionary. Retrieved from https://www.merriam-webster.com/dictionary/diplomacy

“The peaceful conduct of relations among political entities, their principals and accredited agents”

— Harold Nicolson

Nicolson, H. (1969). Diplomacy. London: Oxford University Press.

“The management of international relations by negotiation rather than by force, propaganda or law”

— Geoffrey R. Berridge

Berridge, G. R. (2015). Diplomacy: Theory and Practice (5th ed.). Basingstoke, UK: Palgrave Macmillan.

“A process of communication between political entities that seeks peaceful solutions to conflict and cooperation in international affairs”

— United Nations Institute for Training and Research (UNITAR)

UNITAR. (2011). Introduction to Diplomacy: Online Course Material. United Nations Institute for Training and Research.

Institutional Performance: Rule of Law or Rule of Tweets?

Henry Kissinger defined diplomacy as:

“The art of restraining power.”— Henry Kissinger, in Diplomacy (1994)

This concise formulation captures his realist philosophy: diplomacy is not merely negotiation, but the strategic balancing and limitation of power to preserve international order.

Kissinger, H. (1994). Diplomacy. New York, NY: Simon & Schuster.

Henry Kissinger defined world order as:

“World order refers to the concept held by a region or civilization about the nature of just arrangements and the distribution of power thought to be applicable to the entire world.”— Henry Kissinger, in World Order (2014, p. 9)

This definition reflects his historical-realist view that international systems are shaped by differing civilizational conceptions of legitimacy and power—not by universal norms alone.

Kissinger, H. (2014). World order. New York, NY: Penguin Press.

A functioning world economic order relies on predictability and trust in institutions. Trump's tariff policy subverted this by:

Bypassing Legislative Oversight: Tariffs were often enacted under Section 232 (national security clause), sidestepping Congress.
Arbitrary Enforcement: Exemptions were erratic, creating a perception of favoritism and weakening the rule of law.
Global Retaliation: Allies like Canada and the EU retaliated with countertariffs. WTO credibility suffered as the US paralyzed its appellate body.

This not only undermined the US institutional performance but also contributed to declining global confidence in liberal trade governance. Institutional antisocial performance, as Bernardez notes, is characterized by extractive behaviors and unpredictable governance, deterring investment and collaboration.

Social Performance Metrics: A Snapshot

Dimension	Before Tariffs (2016)	During Tariffs (2018-2020)
EFI (Heritage)	76.8	74.9
DBR (World Bank)	6th	8th
FDI Inflows	$479B	$297B
Hate Crime Rate (Asian Americans)	+0.6%	+149%
Trade Deficit (China)	$347B	$420B
Stock Market Volatility (VIX avg)	14.2	19.5

(Source: Heritage Foundation, World Bank, UNCTAD, US Census Bureau, VIX Index, CSHE, 2021)

From Tariffs to Trust: A Systems View

Using a Balanced Social Performancde (BSP) framework, tariffs under Trump severely eroded social performance:

Transactional (Economic): Lowered efficiency, distorted markets, and reduced investor confidence.
Interpersonal: Polarized social discourse and reduced global collaboration.
Institutional: Weakened rule of law and undermined systemic trust in the economic governance model.

The ripple effects are long-term. Business ecosystems thrive on trust, not tariffs. As Roger Kaufman emphasized, sustainable performance must align with adding value to all stakeholders—not extracting short-term electoral gain at systemic expense.