Newspaper article St Louis Post-Dispatch (MO)

Tariffs Were Supposed to Save American Manufacturing. They're Destroying Jobs Instead

Newspaper article St Louis Post-Dispatch (MO)

Tariffs Were Supposed to Save American Manufacturing. They're Destroying Jobs Instead

Article excerpt

President Donald Trump's tariffs were supposed to make American factories great again.

Instead, a new Federal Reserve study says, they've harmed American manufacturing, destroyed jobs and raised prices for consumers.

Moreover, the damage won't be undone by the president's phase one trade deal with China. The 25% tariffs he imposed in 2018 on a wide range of components and other manufacturing inputs will remain in place.

Aaron Flaaen and Justin Pierce say their study provides the first comprehensive look at how the tariffs affect U.S. manufacturers. That's important because tariff advocates sometimes argue that any pain caused to consumers, financial markets or even the economy as a whole is necessary to maintain a robust manufacturing sector.

Trouble is, the tariffs clearly are hurting the sector they were supposed to help.

Flaaen and Pierce look at three ways the tariffs might affect U.S. manufacturers. One is positive: The tariffs punish foreign competitors, allowing the U.S. firms to gain market share.

The other two are negative. U.S. manufacturers pay more for parts and raw materials they import, and they face retaliatory tariffs from China and other trading partners.

The study concludes that the negatives far outweigh the positive. "We find the impact from the traditional import protection channel is completely offset in the short run by reduced competitiveness from retaliation and higher costs in downstream industries," Flaaen and Pierce write.

Tariffs imposed in 2018 reduced manufacturing employment by 1.4%, they estimate.

U.S. manufacturers of hard drives and other magnetic media, leather goods and motor vehicles were among those hurt most by foreign retaliation. Makers of aluminum and steel products and structural metals saw their input costs rise rapidly.

The result shouldn't be surprising. …

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