The High Cost of the Trump-Biden Tariffs

The evidence shows they benefited a politically connected few, while U.S. consumers and producers paid the bill.

By Phil Gramm and Donald J. Boudreaux. Excerpts:

"As Dartmouth’s Douglas Irwin has shown, more than half of American imports are raw materials or intermediate goods used as inputs in production. Restricting these imports raises producers’ costs and thus hamstrings American production and competitiveness. Every job “created” or “saved” by tariffs, which force American consumers and users of protected inputs to pay higher prices, keeps noncompetitive firms operating."

"'Although Mr. Trump’s tax cuts and regulatory relief stimulated production, his tariffs worked in the opposite direction. Real per capita growth in gross domestic product accelerated from 0.93% in 2016 to 1.6% in 2017 and then to 2.4% in 2018, a 13-year high. But in 2019—the first full year of Mr. Trump’s tariffs—annual real per capita GDP growth fell to 1.83%."

"Annual worker productivity growth in manufacturing hit its peak in 2011 and then began a slow annual decline. From 2011 to 2017, manufacturing worker productivity fell at an average annual rate of 0.65%. It then grew in 2018 with the implementation of the Tax Cuts and Jobs Act. But in 2019, when the Trump tariffs were fully in effect, the productivity of manufacturing workers plummeted by 2.2%—a larger decline than in any prior year dating to 2011."

"A similar story is told by manufacturing output. Over the first three quarters of 2018 it rose by 2.5%, spurred by tax cuts and deregulation. As tariffs commenced, it quickly began to fall. By the last quarter of 2019 manufacturing output was 4.7% lower than it was in the third quarter of 2018. On the eve of the pandemic, 32,000 fewer Americans were employed in manufacturing than at the same point in the prior year"

"His steel and aluminum tariffs, for instance, created a few metals-producers’ jobs—1,000 in steel and 1,300 in aluminum. But for each American worker employed to produce steel or aluminum, 36 were employed in the production of goods that use steel or aluminum as inputs. When tariffs raised the prices of steel and aluminum, many of these workers were given pink slips."

"these tariffs destroyed about 75,000 manufacturing jobs."

"Mr. Lighthizer counters that this comparison “ignores the fact that the biggest users of steel—transportation equipment manufacturing and construction—saw 1.4 million new jobs.” This is a red herring. These new jobs resulted not from tariffs but from the largest infrastructure bill in American history. Not only did the steel tariffs, implemented by Mr. Trump and retained by President Biden, not cause the surge of infrastructure spending, they raised construction costs and reduced the amount of infrastructure that will be built."

"from 1950 through 1990, the Cato Institute’s Scott Lincicome found that the average annual cost to American consumers per job saved during those four decades was $620,000 (in 2017 dollars)."

"the price tag for each job saved by President Obama’s tire tariffs [was] $926,500."

"Mr. Trump’s tariffs on washing machines created a measly 1,800 jobs at an annual cost of $815,000 each."

"the annual cost to consumers for each job saved by the Trump steel tariffs exceeded $900,000."