U.S. trade policies were costing U.S. consumers $1.4 billion per month by the end of 2018, according to researchers from the New York Federal Reserve Bank, Columbia and Princeton.
“While the long-run effects are still to be seen, over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, large changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods,” the researchers wrote.
Those U.S.-imposed tariffs are valued at about $283 billion – with rates ranging from 10 percent to 50 percent.
While the tariffs were imposed by the Trump administration as a means to shield domestic manufacturers, the study found that the cost of the tariffs have so far been manifested in domestic prices – hurting consumers and importers, but not foreign exporters.
Throughout the first 11 months of 2018, there has been an estimated reduction in real income worth about $6.9 billion.
It’s not just the U.S. that is hurting, either. Similar effects were found in countries that have retaliated against the U.S. – indicating the trade war has reduced real income across the global economy.
If the tariffs that were in place by the end of 2018 were to carry on, about $165 billion dollars’ worth of trade per year will continue to be redirected – imposing a large cost on firms that have invested in the U.S. and/or China, the paper notes.
The Trump administration has imposed tariffs on a range of items from solar panels to washing machines to steel and aluminum imports, in addition to the tariffs imposed on about $250 billion worth of Chinese goods – which were met with retaliation from Beijing, escalating the situation into a full-blown trade war.
A meeting between Presidents Trump and Xi Jinping, originally scheduled for the end of the month, was postponed as the pair of leaders iron out the terms of a trade deal. However, even if an agreement is struck, Trump has reportedly said the tariffs could remain in place to ensure compliance.