In September 2024, the University of Chicago conducted a survey among a distinguished group of economists to gauge their stance on tariffs as a mechanism to boost U.S. industry. Surprisingly, only 2% of economists disagreed with the notion that tariffs could positively impact the industry. Despite this, former President Donald Trump has continued to advocate for tariffs, positing that they not only protect but also create domestic jobs. However, opinions remain divided, with some economists like Jeff Ferry from the Coalition for a Prosperous America supporting Trump's tariff plans, while others caution against potential negative impacts on American consumers and the economy.
The non-partisan Peterson Institute for International Economics has projected that Trump's proposed tariffs could result in lowered incomes for Americans, with an impact ranging from around 4% for the poorest fifth to approximately 2% for the wealthiest fifth. This potential financial burden raises concerns about the broader implications of such economic policies.
Trump has been vocal about his dissatisfaction with America's trade deficit, describing it as detrimental to the economy. He argued that his tariffs would address this issue by imposing taxes on imports, particularly from Canada and Mexico, in a bid to curb illegal immigration and drug trafficking.
"Trade deficits hurt the economy very badly," stated Donald Trump.
Despite these claims, a study of Trump's first-term tariffs revealed no significant positive effects on overall employment within the U.S. industrial sectors that were supposed to benefit from protectionist measures.
In 2018, Trump imposed a 50% tariff on imports of washing machines, causing a 12% spike in their value and resulting in an additional $1.5 billion cost to U.S. consumers. Such outcomes highlight potential pitfalls of tariff policies, as they can lead to increased prices for consumers without delivering promised economic benefits.
The Centre for American Progress, a left-of-center think tank, has estimated that middle-income families could face a loss ranging from $2,500 to $3,900 annually due to new tariffs. They predict that a typical household in the middle of the U.S. income distribution could lose around $1,700 each year.
"Under my plan, American workers will no longer be worried about losing your jobs to foreign nations; instead, foreign nations will be worried about losing their jobs to America," declared Donald Trump.
While this rhetoric appeals to nationalist sentiments, researchers warn that another major round of U.S. tariffs could trigger a spike in domestic inflation. This warning is underscored by Trump's assertion that tariffs would not impose costs on American consumers but rather on other countries.
"Not going to be a cost to you; it’s a cost to another country," Trump stated.
The Biden/Harris administration has maintained many of the tariffs implemented by Trump post-2018. This continuity indicates a broader acceptance or strategic necessity of these policies despite criticisms and potential drawbacks.
As debates continue over the efficacy of tariffs in boosting U.S. industry and safeguarding jobs, it becomes crucial for policymakers to weigh the potential economic benefits against the financial burdens placed on consumers. While some economists support Trump's tariff strategies as a means of fortifying domestic industry, others remain skeptical about the long-term impacts on American households and the overall economy.