U.S. Trade Representative Jamieson Greer has argued that economists underestimate one of tariffs' biggest benefits: foreign firms may relocate production to avoid them, a phenomenon known as tariff-jumping. But two Georgetown University economists contend in a recent analysis that this mechanism is not the same as demonstrating tariffs make Americans better off.
Tariff-jumping occurs when companies move production to the protected market to circumvent new tariffs. Greer has pointed to relocations as evidence that tariffs are achieving their intended goals of bringing jobs and investment to the United States.
What the Left Is Saying
Proponents of the Trump administration's tariff strategy, including USTR Greer, argue that economists using traditional models fail to account for tangible shifts in corporate behavior. The administration has pointed to announcements of new manufacturing facilities in the United States as evidence that tariffs are reshaping global supply chains.
Greer has expressed frustration with International Monetary Fund models finding little effect of tariffs on current account balances, arguing these models do not capture the real-world relocation decisions companies are making. Supporters contend that even if traditional metrics show limited impact, the visible movement of production facilities represents a policy victory worth pursuing.
What the Right Is Saying
Professors Marc L. Busch and Rodney D. Ludema of Georgetown University's School of Foreign Service argue in The Hill that Greer mistakes a mechanism for a result. They contend that relocation, by itself, is not evidence of success.
"A firm facing a new tariff has several options," they wrote. "It can absorb the cost. It can pass the cost on to consumers. It can redirect its exports elsewhere. Or it can relocate production to the protected market." The economists argue that showing tariffs change corporate behavior is not the same as demonstrating improved outcomes for Americans.
They note that relocated production may simply duplicate existing facilities, occur at greater cost than before, and result in higher prices for consumers. "Resources may be diverted from more productive activities into less productive ones," they wrote.
What the Numbers Show
The Georgetown economists point to experience with U.S. tariffs against China during Trump's first term as instructive data. According to their analysis, most Chinese producers stayed put, paid the tariff, and passed the cost on to U.S. consumers rather than relocating.
Of the production that did leave China during that period, the majority moved not to the United States but to countries like Vietnam and Mexico, according to economists tracking trade flows. The overall U.S. trade deficit remained "stubbornly large" despite the tariff regime, they wrote.
The professors argue this aligns with standard economic theory: a country's trade balance reflects the relationship between national saving and national investment. Unless tariffs change those fundamentals, they may rearrange trade patterns without eliminating deficits. "That's not ideology," they wrote. "It's arithmetic."
The Bottom Line
The debate centers on how to measure tariff success. Greer points to visible corporate relocations as proof of concept. Critics argue the relevant question is whether benefits outweigh costs for American consumers and the broader economy, a calculation that requires examining prices, productivity, and long-term competitiveness rather than facility openings alone.
What remains clear from both sides: tariffs do influence corporate location decisions. Whether those decisions translate into net economic gains for U.S. workers and consumers depends on factors including whether relocated production operates more efficiently than alternatives and whether higher consumer prices offset wage gains at new domestic facilities.