Tariffs on foreign goods imposed by former President Trump and maintained by President Biden are doing damage to the U.S. economy, according to a new analysis.
The tariffs — one of the central threads of continuity between the two presidential administrations — are having an effect on growth, employment and U.S. investment capacity, according to a report from the Tax Foundation, a right-leaning public policy think tank in Washington.
The group found that the Trump-Biden tariffs will drag down long-run gross domestic product by 0.2 percent, employment by 142,000 jobs, and capital stock by 0.1 percent, over the next 10 to 30 years.
“The $79 billion in higher tariffs amounts to an average annual tax increase on US households of $625,” Erica York, author of the analysis, wrote. “Based on actual revenue collections data, trade war tariffs have directly increased tax collections by $200 to $300 annually per US household, on average.”
“Both estimates understate the cost to US households because they do not factor in the lost output, lower incomes, and loss in consumer choice the tariffs have caused,” she qualified.
Trump upended the U.S. trade regime during his administration, levying steel and aluminum tariffs in 2018 and subjecting about $50 billion worth of Chinese products to a 25-percent tariff.
Biden left many of those changes in place while making his own adjustments. In May, the administration announced increased tariffs on $18 billion of Chinese goods, some of which are likely to assure that cheap Chinese electric vehicles will never make it into U.S. markets.
While the protectionist stance certainly benefits U.S. automakers, who had a rough year in 2023 with a major strike from the United Auto Workers labor union that President Biden supported, it also undermines his goal of reducing U.S. carbon emissions and protecting the environment.
Biden’s environmentally important tariffs extended to solar panels and washing machines.
Solar cell and module tariffs constituted a $200 million tax increase based on 2018 benchmarks, while those on washing machines amounted to a $400 million tax increase, the Tax Foundation concluded.
Reconsidered U.S. trade policies are boomeranging across the globe now as “just-in-time” supply chains, faulted for their fragility in the immediate aftermath of the pandemic, are being shored up and repositioned.
Treasury Secretary Janet Yellen, who has termed this repositioning of value chains “friendshoring,” told the Economic Club of New York earlier this month that this process is ongoing.
“The United States will also continue pursuing an approach I have called friendshoring, which involves deepening ties with a wide range of trusted partners and allies in order to diversify our supply chains and support long-term growth. This also creates significant opportunities for our private sector,” she said.