ECONOMIC POLICYLarger Lesson About Tariffs in a Move That Helped Trump, but Not the Country
Researcher details findings on policy that failed to boost U.S. employment even as it scored political points. Promising to reduce a longstanding trade deficit with China, curb theft of U.S. intellectual property, and reclaim manufacturing jobs, then-President Donald Trump announced new tariffs on a wide range of Chinese imports in January 2018. By at least one key set of measures, the move was a failure.
Researcher details findings on policy that failed to boost U.S. employment even as it scored political points.
Promising to reduce a longstanding trade deficit with China, curb theft of U.S. intellectual property, and reclaim manufacturing jobs, then-President Donald Trump announced new tariffs on a wide range of Chinese imports in January 2018.
By at least one key set of measures, the move was a failure.
After tariffs on Chinese goods jumped from 3 percent to 12 percent, Beijing retaliated by raising tariffs as high as 25 percent on many U.S. goods, including agricultural products and food, devastating U.S. farmers, particularly in the Midwest and Deep South. The USDA estimates that the retaliatory tariffs cost the U.S.$25.7 billion in revenues between 2018 and 2019, 95 percent of the total lost to tariffs imposed by European nations and Canada.
Trump’s actions failed to produce more jobs, and in some instances even had a negative effect on employment, according to a new working paper published in the National Bureau of Economic Research. But the move was successful in one area: winning over voters to Trump and Republican Party.
The Gazettespoke with the economist Gordon Hanson, one of the paper’s co-authors and the Peter Wertheim Professor in Urban Policy at Harvard Kennedy School, about the findings. Hanson studies the impact of globalization on labor markets and helped originate the concept of “China Shock” to describe the huge loss of American jobs in places directly hit by a spike in imports from China in the 2000s. The interview has been edited for clarity and length.
The new tariffs combined with farm subsidies in the South and Midwest did not bring back jobs as President Trump had promised. Even separately, U.S. import tariffs had no positive effect on employment and China’s retaliatory tariffs had a negative effect. What happened?
In the 1990s and 2000s, U.S. industries competing with China were hit by an avalanche of Chinese products arriving on the world market, which led to factory closures, job loss, and in many cases decades of hardship in U.S. regions that were home to those factories and jobs. When the U.S. put tariffs on Chinese imports, it was hitting the heart of what we were buying from China. The expectation was we’re going to reverse that job loss. That didn’t happen for three reasons.
