Former President Donald J. Trump’s drastic tariffs on China and other U.S. trading partners were both a political success and an economic failure, a new study suggests. That’s because the levies won over Republican Party voters even if they didn’t bring back jobs.
The non-partisan working paper examines monthly U.S. employment data by sector to find that Mr. Trump’s tariffs on foreign metals, washing machines and a range of products from China from 2018 do not neither increased nor decreased the overall number of jobs in the sectors concerned.
But the tariffs have prompted other countries to impose their own retaliatory tariffs on American products, making them more expensive to sell abroad, and these levies have had a negative effect on American jobs, notes the newspaper. This was particularly true in agriculture: farmers who exported soybeans, cotton and sorghum to China were affected by Beijing’s decision to increase tariffs on these products by up to 25 percent.
The Trump administration aimed to offset these losses by providing financial support to farmers, ultimately doling out $23 billion in 2018 and 2019. But those funds were unevenly distributed. a government assessment foundand economists say these subsidies only partially mitigated the damage caused by tariffs.
The findings contradict Mr. Trump’s claims that his tariffs helped undo some of the damage caused by Chinese competition and bring back American manufacturing jobs that went abroad. The economists conclude that the overall effect on U.S. employment of the three measures – the initial tariffs, the retaliatory tariffs and the subsidies given to farmers – was “a wash at best, and it could have been slightly negative.”
“We can certainly reject the hypothesis that this tariff policy has succeeded in bringing jobs back to the sectors most exposed to this tariff war,” said one of the study’s authors, David Dorn, of the University of Zurich, in a press release. interview.
Nonetheless, the researchers’ work suggests that aggressive tariffs on foreign goods were a political success for Mr. Trump and the Republican Party.
Drawing on vote count data for presidential and congressional elections, the study suggests that people living in areas affected by the tariffs – particularly the Midwest, the region around the Great Lakes and the South – have become more likely to vote to re-elect Mr. Trump in 2020. They have also become less likely to identify as Democrats and more likely to elect Republicans to Congress, according to the newspaper.
These political beliefs were not completely immune to economic effects: Republican electoral gains were stronger in regions where tariffs and subsidies had a more positive effect on the labor market. And the retaliatory tariffs that other countries have imposed in response to Mr. Trump’s levies have indeed weakened support for Republicans, but only modestly, according to the newspaper.
Still, economists speculate that voters in regions that have been hit hard by economic competition from China in recent decades may have viewed the tariffs “as a sign of political solidarity,” rather than for the consequences real experiences they had on the job.
“People respond very positively, positively from a Republican perspective, to protecting imports of their local industry,” Mr. Dorn said, “but they don’t punish Republicans as much if their location is exposed to tariffs customs in retaliation.”
In addition to Mr. Dorn, the study’s authors are David Autor of the Massachusetts Institute of Technology, Anne Beck of the World Bank and Gordon H. Hanson of the Harvard Kennedy School.
Mr. Autor, Mr. Dorn and Mr. Hanson have conducted influential research on “the Chinese shock” which quantified the extent to which China’s membership in the World Trade Organization had reduced employment in the U.S. manufacturing sector. Their further work examined how these job losses influenced political trends in the American heartland, notably leading to political polarization and increased Republican support.
Mr. Dorn said the U.S. economy grew strongly during the trade war, which may have influenced voters’ perceptions of the effects of the tariffs. “It’s the famous ‘It’s the economy, stupid,'” he said.
“It’s very, very difficult for people to fully understand why the economy is doing well,” Mr. Dorn added. “Is the economy doing well because of a particular government policy, or is the economy doing well despite government policy?”
The findings come as Mr. Trump promises even more aggressive trade measures as a candidate in 2024. Mr. Trump has proclaimed his previous tariffs as a success and has offered to issue an even more extensive levy program if he is re-elected, including a 10 percent tax. “Basic” tariff on all imported products.
Both Democrats and Republicans have shown increased willingness to enact protections for U.S. manufacturing in recent years, after decades in which trade expanded rapidly, supply chains globalized and many factories Americans were moved abroad.
Although Mr. Biden reduced some tariffs imposed by Trump, such as those on Europe, he kept Chinese tariffs and other measures in place. Biden administration officials are also debating additional tariff increases on certain strategic products, such as electric vehicles.
Supporters argue that the tariffs deter China from flooding the United States with cheap goods, thereby protecting vulnerable U.S. manufacturing industries and generating revenue for the federal government.
Critics say the tariffs only raise prices for U.S. consumers and are a particular burden on lower-income people who spend more money on goods. Tariffs also increase costs for U.S. factories that rely on foreign inputs, which can make U.S. products more expensive and less internationally competitive.
During Mr. Trump’s term, average U.S. tariffs on Chinese goods rose from 3.1% to 21% in just two years, while average Chinese tariffs on U.S. goods rose from 8%. at 21.8%, according to the study.
The study’s authors say it’s unclear why tariffs on imports haven’t generated more jobs in the United States. One possibility is that companies are simply importing products from other countries at lower costs, rather than from China, a trend visible in trade data.
In some cases, Mr. Dorn said, U.S. industries that received import protection ended up having higher sales; one possibility is that U.S. companies discovered they could raise prices after tariffs were imposed without increasing production.
It remains an open question whether tariffs that failed to generate substantial employment gains during the trade war could create more jobs over longer periods of time, the paper said.