U.S. Consumers Hit Hardest by Trade Tariffs, Studies Find

The Trump administration’s trade initiatives have targeted China and other foreign powers, but it is U.S. consumers who have taken the hit, according to two new studies. American consumers have been saddled with $69 billion in added costs because of the tariffs the U.S. imposed last year, including on $250 billion on Chinese imports as well as levies on steel and aluminum, according to a study released by a quartet of economists working on a National Science Foundation grant.

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The studies dispute Trump’s oft-repeated claim that the cost of tariffs are born by foreign countries. But the administration has also justified the tariffs as a long-term strategy to bring trading partners to the table, as has happened in negotiations over the North American Free Trade Agreement as well as with South Korea and China. The U.S. had winners, too, the authors of the NSF-backed study said—starting with the federal government, which collected an estimated $39 billion from the new tariffs.

U.S. manufacturers and producers, such as steel mills and washing-machine makers, boosted income by $23 billion because tariffs on foreign competition let them charge more for their products. The Trump administration has justified some of its trade protection on the grounds that these industries could make more money, and ultimately create more jobs, if tariffs leveled the playing field with foreign competitors.

Adding up the costs and benefits, the overall hit to the U.S. economy was $6.4 billion, the study found—relatively scant damage in an economy of $21 trillion. That assessment and one sponsored by the Centre for Economic Policy Research concluded that tariffs gave U.S. producers the ability to raise their prices when the tariffs were imposed on foreign competition. Those foreign companies raised their prices, too. Both studies share a key conclusion: Although tariffs are formally assessed on U.S. importers when they bring in goods from foreign countries, the costs are passed on to consumers.

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https://www.wsj.com/articles/u-s-consumers-hit-hardest-by-trade-tariffs-studies-find-11551820951 (paid subscription)