I started my business, Unless Kids, because like most founders, I witnessed a pain point in my life that others shared. As any parent of young children knows, kids lose interest in toys or developmentally grow out of them pretty quickly, so while you’re buying more toys, older toys pile up. With Unless Kids, a parent can buy toys at a discount and get rid of the toys the kid no longer wants, all in one convenient process. The result is a house with less clutter, toys that don’t end up in the landfill, and cost savings for growing families. It’s also an example of the circular economy.

I’ve worked in the circular economy for many years. Here’s what that means: Rather than the take-make-and-trash model of our current economy, circularity creates a continuous loop that maximizes the recycling of resources and reuse of products, leading to less trash and, for the company circulating products, increased profits. At Unless Kids, this works by repeatedly selling a toy: Our overhead is not the wholesale cost of a brand new product, but rather the labor of recollecting and refurbishing the product.

Lately, the news about tariffs, especially the 145 percent tariff on most Chinese imports, has shined a brighter light on the work of Unless Kids. According to CNN, 80 percent of all U.S. toys are made in China. The conventional retail sector may fear emptier-than-usual shelves this coming holiday season. (As President Trump recently said, “Maybe children will have two dolls instead of 30 dolls.”) But, as a reseller, Unless Kids is buffered from tariffs.

As someone representing the circular economy and a toy resale business — and someone who works in Kensington, a neighborhood besieged by the death of made-in-the-U.S.A. — you might think I would be rejoicing in the President’s trade war that he claims will usher in “the golden age of American manufacturing.”

But I’m not ready to take a victory lap yet, because, as Atul Gawande recently commented to WYNC’s On the Media, this administration’s actions are like “surgery with a chainsaw.” An all-out tariff-induced trade war brutally seeks competitive advantage. Instead, we should use a smarter means to restore fairer trade — a comparative advantage.

A crisis of manufacturing

Before we get to the chainsaw or the comparative advantage, let’s talk about why some surgery is necessary. The global supply chain has wreaked havoc on our climate over the past half a century. According to C40 Cities, over 70 percent of greenhouse gasses now come from “consumption-based emissions” (meaning all processes to make, distribute and discard the goods we buy for our everyday lives). According to a study by the Boston Consulting Group, the international routes that our food and goods take are a major driver of those emissions that are fueling climate change. Making and shipping cheap stuff is killing our planet.

As for the economy, the current administration is not wrong that the decades-old loss of manufacturing devastated U.S. communities. Unless Kids’ warehouse is in the heart of Kensington, a neighborhood full of empty factories of America’s industrial past that blight the neighborhood and cause well-documented social problems.

It’s tempting to buy into the nostalgia of restoring the behemoth that was once American manufacturing — and it could certainly reduce some of those transport-caused emissions. But what is the long-term lift to actually do that? And what are we supposed to do in the meantime?

For the next several years, toys and other goods primarily made abroad must come from somewhere. As a group of leading economists recently discussed in The New York Times, bringing manufacturing back to the U.S. won’t just require building factories and importing (yes, importing) new tech, it will call for a host of remedies, from reskilling to wage equality. It’s not happening overnight, or even by the end of Trump’s term in office.

For the foreseeable future, there is a trade imbalance that needs to be addressed — and, those same economists predict, an economy to be preserved. Which is why it’s worth exploring a potential upside to tariffs — and not just for my toy resale business.

Tariffs’ feasible benefit for the circular economy

Caroline Vanderlip is the CEO of Re:Dish, a company that develops reusable foodware container systems for entities as large as stadiums, corporate campuses and school districts. Not only are Re:Dish’s operations concentrated in the regions they are serving, but their reusable foodware containers are made in the U.S.A. and therefore not subject to tariffs.

Vanderlip says her prospective clients are “very worried about tariffs, as most single-use disposable products come from China.” Her business could stand to benefit. It would be a major success story if tariffs could reduce single-use plastic consumption and increase the use of reusables. But whether it’s reusables or single-use, these materials still rely on plastic, which is still overwhelmingly produced abroad. Could the answer lie in recycling more plastic? Yes and no.

Currently, only 9 percent of plastics are actually recycled — because the overwhelming majority of our cities and counties just don’t have the facilities, means or demand to do more. One local company trying to change that is Rabbit Recycling. They offer on-demand recycling pick-up of both traditionally recycled materials (glass, paper, aluminum, plastics) and harder-to-recycle items (batteries, light bulbs, textiles, electronics), which they turn around and resell for reuse and recycling. Could higher prices on plastics benefit them? Maybe.

The truth is more complicated. Rabbit Recycling’s bottom line is tied much closer to the price of oil and natural gas, explains co-owner Matt Siegfried. Typically, when the price of oil falls, the price of recycled plastic also falls. Although they haven’t seen any price effects yet from tariffs, Siegfried is continuing to track the market. But just like Re:Dish’s built-in competitive advantage through circular supply chains, Siegfried explains, “Our plastic stays in the U.S.A. due to its high levels of cleanliness.”

These two examples show that yes, fully-funded circular U.S. businesses that don’t rely on global markets could feasibly benefit from increased demand for recycled and reusable goods. But these examples also show that circular businesses inherently create more resilient, local supply chains and reduce waste — which buffer them from not only shocks like tariffs, but also other major disruptions like climate change and resource scarcity.

However, circular businesses seeking venture capital won’t be so fortunate. The startup economy is not looking good. Wired recently reported that investors are dramatically scaling back in anticipation of a tariff-induced “world of hurt.” This is not an environment conducive to the creation or expansion of new circular businesses.

A better solution: Focus not on decimating our competition, but cooperating — seek “comparative advantage.”

The comparative advantage

British economist David Ricardo developed the theory of comparative advantage in 1817, and it spurred the development of the industrialized global economy. The basic premise is that nations should specialize in the products that they’re really good at producing rather than mediocrely producing a wide variety of items for export. When it comes to toys, the apropos example is LEGOs.

The Danes struck gold in 1932 when they figured out how to make these little plastic (originally wooden) blocks stick together. Historically, LEGOs’ major economic benefit to the U.S. economy isn’t producing them, but by selling them — and building an entire entertainment industry off of them, from miniature LEGOLAND Discovery Centers like in Plymouth Meeting, or entire LEGO-theme parks and resorts.

LEGOs are primarily made in Denmark, but also in Hungary, Czech Republic, Mexico and China. Although there’s a factory in the works in Chesterfield, Virginia, the comparative advantage model says let’s keep making them where they’re made, and instead transform the business of reselling LEGOs here, while the Danes can focus on reselling the imported American items we already make the best, like KitchenAid mixers, Gibson guitars and Ford cars.

Comparative advantage is not about making nothing. It’s about making what’s needed, reusing what we can and circulating money and products through the economy.

While localized circular systems focused on repair, refurbishment, remanufacturing, and reuse within a defined geographic area offer significantly greater resilience to sudden policy changes like tariffs, it’s also true that in today’s interconnected world, our economies thrive on a degree of collaboration and exchange on all levels. It’s not an either/or argument. It’s about creating a more balanced and resilient supply chain landscape — one that embraces global interconnectedness while strategically leveraging the power of local circularity.

There are many contributing factors to this historically bad investment market, but the current economic turbulence is certainly not helping. And it pains me to think of the many innovative companies that may never see funding due to being in the wrong place at the wrong time. Honestly, I’ll happily give up the short term competitive edge that tariffs give us in the retail business for more effective policies to bolster domestic supply chains and longer term investments in innovations like the larger circular economic system that can transform our economy for the 21st century.

Correction: An earlier version of this post misspelled Matt Siegfried’s last name.

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