Most economists do not believe that blunt protectionist trade policies stand to ultimately benefit American workers and American businesses.
But that certainly didn’t stop Donald Trump’s administration from implementing an escalating series of tariffs against China.
In January of 2018, the Trump administration imposed tariffs on imported solar panels and washing machines, and the next month it also announced new steel and aluminum tariffs.
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The trade war swiftly escalated in March of 2018, with China announcing its own set of tariffs on 128 U.S. exports. May of 2018 saw the Trump White House announcing additional tariffs, and China again retaliated in June of 2018 with more tariffs of its own.
This pattern of increasingly ratcheted up retaliatory tariffs continued for months.
Some of the tariffs indeed benefited workers in some sectors. But benefits for these few came at the expense of many others.
For instance, the trade war cost U.S. consumers about $817,000 in higher prices for each job created in the washing machine industry, according to one study; in the steel industry, each job created by the tariffs cost American consumers $900,000. Spending nearly seven figures to create a job with a five-figure salary is hardly good economics.
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Another recent study found that Trump’s U.S.-China trade policies ultimately cost the American economy close to a quarter of a million jobs. The Congressional Budget Office concluded that the trade barriers imposed by the Trump administration since January of 2018 reduced average real household income by $580 in 2020, in addition to shrinking the U.S. GDP by nearly a third of a percent.
Of course, despite his many claims to the contrary, Donald Trump lost the election in 2020. Joe Biden is now the president. Given the deleterious effect the Trump tariffs had on the U.S. economy, they would seem to be destined for Uncle Joe’s growing policy scrap pile as he cleans house.
But undoing years of trade conflict isn’t as simple as stopping construction on a wall that Mexico definitely did not pay for. Many businesses have already altered their supply chains, and slugging it out on trade for several years with China did not create fertile ground for cooperation. Most of the higher tariffs implemented during Trump’s term remain in place.
Biden has promised not to enter into any new international trade agreements until ushering in what he calls “major investments here at home, in our workers and our communities.” Meanwhile, though, the Biden administration is rebuilding relationships with traditional U.S. allies in order to “develop a coherent strategy” when collectively confronting China on trade. Some nations are already paying a steep price for doubling down on their relationship with the U.S. Exports to China from Australia, for example, dropped by $2.3 billion in 2020. While Covid no doubt played a role in the 2020 decrease in Australian exports to one of its biggest trading partners, the drop was also due in part to Australia’s heightening public support of the U.S. in its trade dispute with China.
International trade is complex, and there were many legitimate underlying trade concerns which led to the Trump administration’s trade war against China. Even so, most experts agree that the escalating tariffs were the wrong way to deal with U.S.-China trade tensions. The Trump tariffs cost U.S. consumers and businesses far more than they were worth in the long run.
Now, however, Biden is more focused on domestic issues. The trade policies his administration has pursued thus far are subtle, like building supply chains that do not depend so heavily on Chinese links. But given time, after rebuilding international support from traditional U.S. allies, hopefully the new administration can confront the U.S.-China trade relationship more directly. The steep tariffs implemented under the Trump administration are an economic hurdle that U.S. businesses and consumers should not have to keep contending with.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].