Trump believes he can deploy tariffs without tradeoffs or distortions. In reality, each new tariff move creates both.

Over the past few decades, Japan-based automaker Toyota has spent billions of dollars to expand its manufacturing and assembly plants in the United States. Those plants now employ over 64,000 people across North America and have churned out millions of vehicles.

For politicians who fetishize blue-collar work, this ought to be tremendous news. Indeed, it also illustrates one of the underappreciated aspects of globalization and free trade: The flow of capital and goods often gets blamed for the outsourcing of American jobs overseas, but it also means the creation of jobs in America that are backed by investments from foreign firms.

Now, however, the Trump administration seems to be trying to undo that. With a series of short-sighted tariff maneuvers, the president has effectively told Toyota (and other Japanese carmakers) that it should do more of its manufacturing in Japan and stop trying to create jobs in America.

Earlier this week, President Donald Trump announced a new trade deal with Japan that will include a 15 percent tariff on Japanese goods, including imported cars.  The details of the deal remain somewhat vague, but that's a significant discount compared to the 25 percent tariff the administration has imposed on cars imported from everywhere else.

The reduced tariffs for Japanese cars are significant because of how that provision interacts with the Trump administration's other trade policies that are aimed at making it more expensive to manufacture cars in the United States. The president has imposed a 50 percent tariff on steel and aluminum (both of which are essential for automakers) and has slapped a 25 percent tariff on imported cars and car parts. Those tariffs are already dinging the profits of American carmakers—General Motors reportedly lost more than $1 billion in the second quarter of the year—and auto industry experts say they will raise prices, reduce demand for new cars, and generally make American cars less globally competitive.

In short, the Trump administration is offering an incentive to import finished cars from Japan, while making it more expensive to buy the stuff you need to build cars in America.