Title: Trump Trade War: The Economic Impact of U.S. Tariffs
Headings: Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions
Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions
Revenue (Billions)
$79.96
Long-run GDP
-0.23%
Wages
-0.15%
FTE Jobs
-179,800
Recent Updates
September 18, 2020
August 13, 2020
February 14, 2020
Key Findings
Introduction
Tariffs Raise Prices and Reduce Economic Growth
Total Impact of Imposed and Announced Tariffs
Table 1: Total Impact of Imposed and Announced Tariffs
Tariffs Imposed by the United States
Section 232, Steel and Aluminum
Section 301, Chinese Products
WTO Dispute, European Union
Section 201, Solar Panels and Washing Machines
Model Results
Table 2: Impact of Trump Administration Imposed Tariffs
Tariffs Threatened by the United States
Section 232, Automobiles and Parts
Section 301, Chinese Products
WTO Dispute, European Union
Section 301, France’s Digital Services Tax
Model Results
Table 3: Impact of Trump Administration Threatened Tariffs
Retaliatory Tariffs Imposed and Threatened
Table 4. Section 232 Steel and Aluminum Retaliation
Table 5. Section 301 Retaliation
Model Results
Table 6: Impact of Retaliatory Tariffs
Conclusion
Timeline of Activity
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Content: Tariffs could reduce U.S. output through a few channels. One possibility is that a tariff may be passed on to producers and consumers in the form of higher prices. Tariffs can raise the cost of parts and materials, which would raise the price of goods using those inputs and reduce private sector output. This would result in lower incomes for both owners of capital and workers. Similarly, higher consumer prices due to tariffs would reduce the after-tax value of both labor and capital income. Because these higher prices would reduce the return to labor and capital, they would incentivize Americans to work and invest less, leading to lower output. Alternatively, the U.S. dollar may appreciate in response to tariffs, offsetting the potential price increase on U.S. consumers. However, the more valuable dollar would make it more difficult for exporters to sell their goods on the global market, resulting in lower revenues for exporters. This would also result in lower U.S. output and incomes for both workers and owners of capital, reducing incentives for work and investment and leading to a smaller economy. Total Impact of Imposed and Announced Tariffs
If all tariffs announced thus far were fully imposed by the United States and foreign jurisdictions, U.S. GDP would fall by 0.51 percent ($127.21 billion) in the long run.