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John G. Murphy: Five ways that Trump’s trade war has brought pain to so many Americans and alienated our closest allies – Publications – AEI

Summary:
AEI John G. Murphy: Five ways that Trump’s trade war has brought pain to so many Americans and alienated our closest allies In an LA Times op-ed John G. Murphy explains how “Tariffs are hurting American families and workers” starting with these five ways that tariffs and Trump’s trade war have “brought pain to so many Americans and alienated our closest allies” (bold added): 1. Tariffs are taxes, and they are paid by American consumers not foreigners. Tariff hikes have meant price hikes on everything from beer and clothing to off-road vehicles and RVs. In some cases, the new tariffs imposed in the past year are being paid indirectly by people like the U.S. auto workers who saw their 2018 profit-sharing checks reduced by 0 each. 2. Tariffs have caused some input prices to soar,

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AEI
John G. Murphy: Five ways that Trump’s trade war has brought pain to so many Americans and alienated our closest allies

John G. Murphy: Five ways that Trump’s trade war has brought pain to so many Americans and alienated our closest allies - Publications – AEI

In an LA Times op-ed John G. Murphy explains how “Tariffs are hurting American families and workers” starting with these five ways that tariffs and Trump’s trade war have “brought pain to so many Americans and alienated our closest allies” (bold added):

1. Tariffs are taxes, and they are paid by American consumers not foreigners. Tariff hikes have meant price hikes on everything from beer and clothing to off-road vehicles and RVs.
In some cases, the new tariffs imposed in the past year are being paid indirectly by people like the U.S. auto workers who saw their 2018 profit-sharing checks reduced by $750 each.

2. Tariffs have caused some input prices to soar, undermining the competitiveness of U.S. manufacturers. Due to tariffs, steel prices in the U.S. are roughly twice as high as in Europe, where industrial inputs are usually more expensive (see chart above of double-digit increases in various PPI series for steel and steel products). This puts pressure on businesses to offshore the manufacture of products that use a lot of steel such as nails, lockers and auto parts. For business owners, layoffs are the final recourse resisted for as long as possible, but it’s tough competing with rivals who benefit from lower production costs.

3. Tariffs invite retaliation against American exports. The U.S. has put tariffs on about $300 billion of imports in the past year, and these border taxes have boomeranged against U.S. exporters. The U.S. Chamber of Commerce has detailed each state’s affected exports at TheWrongApproach.com. Exports of Wisconsin cheese, South Carolina-made cars, Pennsylvania apples, Kentucky bourbon, Iowa pork and Michigan metal-stampers have all been targeted with foreign tariffs. In a sense, so have the American workers and farmers who make these products.

4. Tariffs don’t create jobs. You would expect steel and aluminum tariffs to boost employment in the production of these metals, but employment in these sectors has been almost flat since tariffs were imposed. Looking at the broader impact, one study found that “16 jobs would be lost for every steel or aluminum job gained.” Tariffs will result in a net loss of more than 400,000 American jobs, it concluded.

5. Tariffs have been imposed on America’s closest allies, including even Canada and Mexico. This undermines U.S. efforts to build an international coalition of like-minded countries to join us in combating the use of unfair trade practices. Trade can be an engine of growth, job creation and prosperity; tariffs undermine all of that. We need to end the destructive tariff war that is gnawing at our economy’s foundations before it’s too late.

Here’s John’s conclusion:

Trade can be an engine of growth, job creation and prosperity; tariffs undermine all of that. We need to end the destructive tariff war that is gnawing at our economy’s foundations before it’s too late.

MP: In other words, let’s stop the collateral damage and friendly fire from Trump’s “economic suicide bombings” to quote Steve Horwitz.

John G. Murphy: Five ways that Trump’s trade war has brought pain to so many Americans and alienated our closest allies
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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