As I stated earlier this week, I have my doubts about the tariffs that the president rolled out yesterday. As a former economics major, I am also aware of the economic arguments against tariffs. (So please do not feel obligated to send me a copy-and-pasted treatise on the subject. I almost certainly know more about it than you do.)
That said, there is a counterargument. There is a counterargument for almost everything. And this one is worth considering: my 1984 running shoes.
In 1984, I began to run high school track and cross country. I needed a pair of specialized running shoes. While there have been some enhancements over the past 40 years, the basic technology of running shoes has remained the same. Running shoes aren’t like computers.
My brand-named running shoes (either Nike or New Balance) cost $29.99 in 1984. That’s about $92 in 2025 money, and about what a similar pair of shoes would cost today.
But here’s the thing: my 1984 shoes had a MADE IN THE USA tag.
Nowadays, most running shoes are made in Vietnam, Indonesia, etc.
So what the heck happened?
Here’s what happened: large corporations like Nike started paying much less for labor when they shipped production overseas. Their inflation-adjusted prices largely stayed the same. Their profits increased.
Where did those profits go?
How about CEO pay?
CEO pay has risen by more than one thousand percent since 1978. In 2020, CEOs were paid 351 times as much as the average worker. Pay has also increased substantially for other members of the managerial and shareholder class.
In other words, it could be that in the age of globalization, corporations like Nike are underpaying for labor, and overpaying for management. By this logic, reshoring overseas production would restore a balance of compensation between the working class and the managerial class. (Note: No one is suggesting that CEOs should be paid the same as factory workers. But should CEOs earn 350 times more than the average worker?)
Ironically, this is similar to arguments that pro-labor Democrats made in the 1980s, back when Republicans were the champions of free trade, and the cheerleaders of the “global economy”.
Like everything else concerning economic theory, this argument is also made ceteris paribus, or “all else remaining the same”. Will reshoring production mitigate wealth inequality in America? I don’t know.
What I do know is this: in 1984, companies like Nike and New Balance figured out how to profitably manufacture running shoes in the USA, without charging $400 for a pair of shoes.
If they could do it in 1984, why can’t they do it now?
-ET