A team of economists has found that U.S. consumers have paid the entire price for Trump’s tariffs. Producers in America’s agricultural heartland — largely Republican — have been especially hammered. From columnist Michael Hiltzik:
President Trump and China's President Xi Jinping leave a meeting together in Beijing in 2017. Their trade war continues.
The authors, Pablo D. Fajgelbaum of UCLA, Pinelopi K. Goldberg of Yale and the World Bank, Patrick J. Kennedy of UC Berkeley and Amit K. Khandelwal of Columbia, pegged the annual economic loss from Trump’s tariffs at $68.8 billion, or about 0.37% of gross domestic product, chiefly because of higher-cost imports. Gains to some domestic producers who benefited from protective tariffs cut the overall loss to $6.4 billion, or .03% of GDP.
But in the authors’ eyes, the distributional impact is more important. Put simply, a few manufacturing sectors gained — “Think steel tariffs,”In their paper, titled “The Return to Protectionism,” the authors observed that “this return to protection is unprecedented in the post-war era due to the sizes of the countries involved, the magnitude of the tariff increases, and the breadth of tariffs across sectors.
Yet as many trade experts have observed, the Trump administration launched its trade war based on fundamental misunderstandings of how international trade works, little consistency in applying tariffs to products or sectors, and little consideration of how the trade war would affect the economy.
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