This Question Could Change the Course of Trump’s Trade War—if Only we Would ask it

Ann Skeet is the senior director of leadership ethics at the Markkula Center for Applied Ethics, and Adina Ardelean, is a Ethics Center Faculty Scholar and teaching professor, economics, at the Leavey School of Business; both at Santa Clara Unversity. Views are their own.

This article was originally published by MarketWatch on July 1, 2025 and is republished with permission.

The Trump administration’s significant shift in U.S. tariff policy has roiled international markets with its severity and on-again-off-again nature. Recent legal challenges disrupted President Donald Trump’s trade strategy, so his administration has moved swiftly to overturn them.

Regardless of how the courts rule, there are serious doubts about whether such tariffs are ethical. Tariffs fail justice due to their inequities. They use people as a means to an end and erode the United States’ global standing.

Economists are skeptical that tariffs are the best way to achieve the stated goals of reshoring production, reducing the trade deficit, serving as leverage with nations in various negotiations, and bringing in money to pay off the U.S. debt and reduce American taxes.

This is partly because some of these goals are contradictory. Most economists do not consider these goals as priorities — particularly reducing trade deficits, which they see as a poor indicator of a country’s economic well-being. Ignoring such expertise denigrates moral prudence, which calls on us to weigh evidence and use data to make decisions.

Economic analyses suggest that these tariffs will probably have a dampening effect on overall U.S. economic growth. Rising prices inevitably mean that American households are spending more to maintain their standard of living. According to estimates from the Yale Budget Lab last April, the tariff hikes could increase average household annual spending by $3,800.

These costs, however, will not be spread evenly, one of the key reasons such tariffs are unethical. While wealthier households were projected to see a larger absolute increase in spending — around $8,100 annually — the burden on lower-income households was projected to be disproportionately greater. For poorer families, the estimated $1,700 in additional costs represents a much larger percentage of their total budget. This means tariffs are a regressive tax measure — they hit middle- and lower-income households harder than the wealthy.

The Markkula Center for Applied Ethics offers a Framework for Ethical Decision Making that is useful in analyzing the ethical implications of these tariffs. The framework offers different lenses for considering ethical dilemmas, and we start by applying the justice or fairness lens. The regressive nature of these tariffs is unfair — the benefits and burdens are not distributed evenly and this injustice is perhaps the most obvious way that tariffs are unethical.

Consumers are unevenly and unfairly impacted, but the impact on businesses is also uneven. Those with a global supply chain are susceptible to disruptions and higher costs. Further, corporate leaders face an ethical dilemma as they are obligated to protect shareholders’ returns while also considering the impact on their customers. Raising prices too high risks losing customers, ultimately reducing shareholder value, presenting a difficult quandary for business executives. Conversely, companies that choose to absorb tariff costs often see their profit margins shrink. This can result in negative repercussions on markets, fueling volatility that harms millions of American investors.

The administration’s approach to implementing the tariff policy adds to this volatility. Starting and stopping tariffs to maintain leverage in negotiations has added a level of uncertainty, generating significant financial market volatility, even before the responses of retailers are factored in. This has impacted investors unevenly as retirees and parents of college-age students have needed short-term access to the funds in their 401(k) retirement and 529 college-saving accounts, yet another example of how the current tariff burdens are inequitable.

One of the most widely cited ethical precepts is the idea that human beings should not be used as means to an end — a concept introduced by Immanuel Kant and one applying the rights lens from the Markkula Center framework. In this case, individual consumers, investors, small-business owners and foreign producers have all been used to appeal to the jingoistic goals of this administration to serve the United States’ interests solely.

This hypernationalism is not virtuous, another ethical concern. Countries allied with the United States, with long-term trade agreements based on those relationships, have felt the effects of the U.S.’s uneven tariff policy. The same approach that has been used to give the U.S. the upper hand in negotiations has unraveled decades of goodwill and limited the U.S.’s ability to use soft power, a means of achieving its future goals.

Tariffs also fail to meet the ethics test when viewed through a utilitarian lens. Utilitarianism is the belief that the ethical option is one that brings the greatest good to the greatest number of people, or does the least harm. Based on the negative impacts felt globally by these tariffs, it is extremely hard to argue that they are ethical.

Since tariffs benefit a small number of domestic producers while also harming consumers and many other domestic producers, even a nationalistic policy will carefully consider these trade-offs. Tariffs should be targeted and transparent, and designed to minimize negative impacts. Instead of applying blanket tariffs, an ethical policy should target particular industries with a clear and justifiable need for protection. Ethically defensible tariffs could include those that protect industries vital to national security or an infant industry that is crucial to the nation’s future growth (requiring temporary protection until it can establish itself); they also could counteract unfair advantages from foreign competitors that gain an edge by abusing their workers or the environment.

Furthermore, tariff policy should be transparent, specifying accurately and clearly the anticipated benefits and costs to all stakeholders. An ethical trade policy should also be designed to minimize the negative effects on the most vulnerable, such as low-income households and on developing countries, who are least able to absorb the costs. Finally, to avoid creating uncertainty for businesses and consumers, tariff policy should be introduced with significant advance notice and be applied consistently, not erratically.

The full effects of these tariffs and their fate in our judicial system will unfold over time. For now, they portend higher costs for American consumers and businesses, with a particularly significant impact on lower-income households. But a troubling side effect is the damage tariffs have done to the United States’ global reputation. Being perceived as a country behaving ethically and rationally benefits the common good. It gives countries standing to provide global leadership, supports a healthy global economy, and allows countries to leverage their soft power. Even with frequent pauses caused by the administration or the courts, the damage from these unethical tariffs has been done.