A new analysis by the National Tax Foundation tallies up the damage that the tariff battles between America and its largest trading partners pose to the United States economy and jobs.
The NTF is a leading independent tax policy group in Washington, D.C.
Foundation analysts modeled a number of scenarios and determined that if all current and planned tariffs go into effect, it would eliminate up to 571,000 full-time jobs.
Low- and middle- income earners would be hit the hardest. If all tariffs are imposed, it would wipe out nearly half of the gains from the $1.5 trillion Tax Cut and Jobs Act of 2018, the analysis shows.
When the Tax Cut went into effect last year, the Tax Foundation projected widespread benefits to all income levels. But the new analysis shows that imposed and planned tariffs will do widespread harm, forcing price hikes on imported goods.
Another analysis released by the Federal Reserve Bank of New York in May reports that tariffs imposed last year cost the typical American household $414. If President Trump imposes a new round of trade taxes on all Chinese products next week, the cost will rise to $831.
“Tariffs damage economic well-being, and lead to a net loss in production and jobs, and lower levels of income,” according to the Foundation.
In Arizona, almost $600 million in exports to China are threatened by tariffs. Transistors, bovine skin and hides, and cotton are among Arizona exports most impacted.
A year of punishing tariffs, more to come
For the past year, President Trump has imposed or threatened to impose punishing tariffs on China, Mexico, Canada, Japan, India, the European Union, Russia, Japan, Turkey and others. Most of those countries have or plan to retaliate in kind.
Meanwhile, Trump is readying to slam a fresh round of 25 percent trade taxes on all $300 billion worth of goods coming from China if he cannot make a deal with President Xi Jinping during the G20 Summit in Osaka, Japan Jun. 28-29.
The president has repeatedly touted tariffs as great for America, intended to spur more industry and growth right here.
But national lawmakers and the NTF’s economic analysis report tell a starkly different scenario.
During hearings last week on White House trade policies, congressional members spoke of the toll the past year’s trade taxes have taken on their states. Farmers, ranchers, auto manufacturers, semiconductors, outdoor recreation supplies and other sectors are losing profits and watching their overseas markets disappear.
The NTF analysis states that the harm to U.S. businesses and consumers will increase if additional tariffs are put in place. Here are some of the key findings from the NTF analysis:
Impact of tariffs imposed and planned by White House
Tariffs imposed so far and planned by President Trump’s administration would reduce long run GDP by $50.3 billion and eliminate 155,878 full-time equivalent jobs.
Among the products most affected so far are washing machines, solar panels, steel, aluminum, semiconductors, pork, cotton, and thousands of other products from China. Washing machines, for example, were subject to a 20 percent tax last year on the first 1.2 million imports. After that, subsequent imports are subject to a 50 percent tax increase.
If Trump acts to place a fresh round of 25 percent taxes on all Chinese goods including automobiles and parts, laptops, cell phones, clothing, and other consumer products, the U.S. GDP will lose another $112.23 billion, resulting in lower wages and 347,988 fewer full-time equivalent jobs.
Impact of retaliatory tariffs on American exporters
Other countries including India, Turkey, Russia and the European Union have or plan to impose retaliatory tariffs on products like almonds, tobacco, whiskey, automobiles, cosmetics, chemicals, and steel and aluminum. If these retaliatory tariffs are fully imposed, the NTF analysis estimates the GDP will fall $21.53 billion and eliminate 66,725 full-time equivalent jobs.
Impact if all planned and retaliatory tariffs go into effect
If all planned tariffs and retaliatory tariffs go into effect, the GDP would fall by 0.74 percent, or $184.07 billion, eliminating 570,591 full-time jobs.
That would effectively offset 44 percent of the long-run impact of the Tax Cuts and Jobs Act of 2018, the analysis said.
“The Trump administration would do well to not follow a path of imposing tariffs that could dampen the U.S. economic outlook,” the report states.