By Guest commentary Friday, January 9th, 2026

By Gerhard Apfelthaler

On Dec. 16, David Bahnsen, money manager, conservative commentator, and keynote speaker at the California Lutheran University Center for Economic Research and Forecasting’s Annual Ventura County Economic Forecast event in 2024, recently released a podcast titled “Making America Crony Again”. While I don’t agree with everything Bahnsen says, his commentary on the U.S. tariff regime is spot on. 

Tariffs, we have been told, are a “beautiful” policy tool. They are supposed to make America rich, restore fairness to global trade, and reassert economic supremacy. Those are the marketing tag lines. However, policy outcomes have a tendency to reveal truths that slogans often obscure. And in the case of tariffs, the truth is found in the many exemptions that have been made over the course of 2025.

In December, U.S. Customs and Border Protection reported that in 2025, the U.S. took in more than $200 billion in customs duties between January 20 and December 15. So far so good. But why not more? After all, projections of up to more than $700 billion were reported earlier in 2025. 

The answer is: exemptions. 

While tariff exemptions are not reported centrally, Bahnsen estimates that, to date, roughly $1.7 trillion in imports have been exempted from originally imposed tariffs. Electronics, semiconductors, agricultural products, industrial inputs, critical minerals — the list is long and not marginal; it is foundational to the modern economy. 

These carveouts do not represent fine-tuning at the margins. They represent a quiet but sweeping admission that tariffs impose real economic costs, costs serious enough that policymakers feel compelled to shield large portions of the economy from them. 

If tariffs were truly doing what their advocates claim — if they were revenue-creating tools paid for by foreign producers, wouldn’t exemptions then be unnecessary? One does not exempt goods from a benefit. One exempts them from a burden.

Supporters often respond that exemptions demonstrate “nuance” and “nimbleness.” But in economic policy, nuance without rules becomes discretion, and discretion without constraints becomes favoritism. 

When tariff relief depends on lobbying capacity or political proximity, the policy ceases to be about trade or national competitiveness. Instead, it becomes about picking winners and losers. 

That shift matters profoundly for business leaders and economists alike.

Market economies function on predictability, neutrality, and equal application of the law. Firms invest, hire, and innovate when they believe the rules apply broadly and consistently. 

Tariff carveouts undermine that confidence by introducing a political layer into what should be a rules-based commercial environment. Large firms with regulatory teams and Washington access adapt. Smaller manufacturers, import-dependent businesses, and downstream producers absorb the cost.

This is where the policy contradiction becomes impossible to ignore. If tariffs are meant to rebalance trade, exemptions directly sabotage that goal. If tariffs are supposedly paid by foreign exporters, exemptions make no sense at all, as no domestic constituency would need relief. 

The very existence of carveouts concedes what the vast majority of economists have long argued: tariffs function as taxes on domestic economic activity, passed through supply chains to businesses and consumers.

The agricultural sector illustrates this dynamic vividly. Billions of dollars in government relief have been distributed to farmers to offset the damage caused by retaliatory tariffs and disrupted export markets. That relief is not evidence of success; it is evidence of harm. 

When taxpayers are asked to subsidize those hurt by trade policy, the claim that tariffs are a net economic gain evaporates. Ironically, even critics of tariffs should not celebrate exemptions as a partial victory. While carveouts may reduce short-term damage for select sectors, they do so at the cost of fairness and transparency. 

In the end, tariff exemptions tell the story policymakers will not say out loud. They show that tariffs raise prices, disrupt supply chains, and impose domestic costs. 

They show us that trade policy, when weaponized for political gain, quickly becomes economically incoherent. And they confirm what free-market advocates have warned all along: protectionism cannot be fine-tuned into efficiency. Tariffs may claim to make America rich. 

Their exceptions reveal who actually pays.

Gerhard Apfelthaler is the dean and a professor of international business at California Lutheran University’s School of Management.