America’s trade war resulted in $7.8 billion in losses for the nation’s economy, while the subsequent higher costs of imports took more than $68 billion from consumers and producers, economists at leading US universities found.
Imports from targeted countries declined 31.5 percent, while targeted US exports fell by 11 percent, the evaluation of the short-term impact of trade conflicts with partners across the globe has shown.
The findings were presented in a study titled ‘The Return to Protectionism’, written by researchers from Yale, Columbia, UCLA, and the University of California, Berkeley. The paper was published by the National Bureau of Economic Research earlier in March.
While $7.8 billion is a relatively small figure for the country’s whole economy, amounting to 0.04 percent of GDP, the authors note that American “consumers bear the incidence of the tariff.” Annual consumer and producer losses from the higher costs of imports totaled $68.8 billion, or 0.37 percent of GDP.
‘Republican counties bore the largest cost of the full war’
While “all but 30 counties experience a reduction in tradeable real income,” Trump’s actions surprisingly brought the largest losses to GOP counties, according to the research.
The authors said the tariff fight “relatively favored tradeable workers in Democratic-leaning counties,” where Trump’s share of the 2016 presidential vote was around 35 percent. However, workers in Republican counties with vote shares between 85-95 percent “bore the largest cost of the full war.” The losses in those areas are 58 percent larger than in heavily Democratic counties.
“We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war,” the economists concluded.
Last year, the Trump administration imposed unilateral tariff increases to combat what the US leader calls unfair trade practices by China, the European Union, and other trade partners. The move was met with tit-for-tat measures, including from Beijing, with which the US has been trying to ink a trade deal during lengthy talks. The standoff with China has already resulted in duties on $250 billion in Chinese imports, while China retaliated with levies on $110 billion in US goods.
Washington also applied levies of 25 percent on imports of steel and 10 percent on aluminum from the EU, Canada, and Mexico. Brussels responded with duties of 25 percent, including on Harley-Davidson motorcycles, bourbon, peanuts, blue jeans, steel, and aluminum.