Two reports released today show the high costs and low rewards of President Trump’s trade war. The upshot, based on official government data from the latest report through November 2018, is that U.S. trade deficit worsened.
One of the president’s stated goals for raising tariffs was reducing the trade deficit. But data shows the deficit in goods and services from January to November 2017 was $500.388 billion, compared to the same from January to November 2018, which was $552.264 billion. Meaning, the trade deficit went up 9.4 percent from 2017.
The data does also show that the overall decrease in trade deficit in November coincided with an overall decrease in imports and exports (so less economic activity). But both decreases are clearly the result of the tariffs the Trump Administration has imposed as well as the retaliatory tariffs from affected countries, including our largest trading partners China, Canada, and Mexico.
The economic pain caused by tariffs and foreign retaliatory tariffs could get much worse. A new study by Tariffs Hurt the Heartland shows that current and additional tariffs would reduce American jobs, the average American household’s income and the gross domestic product. The study finds that if the US and China do not come to agreement to lower tariffs by March 1, tariffs will increase to 25 percent and will reduce employment by over 934,700 jobs, cost the average family of four $767 per year and reduce annual GDP by 0.37 percent. The study also looks at other scenarios, including if the president finds automobiles and auto parts a national security threat and seeks to impose tariffs on countries other than Canada, Mexico, the European Union, Korea, and Japan, as well as impose a 25 percent tariff on all remaining imports from China. Should that happen, the report states employment would be reduced by 2,235,400, cost the average family of four $2,389 per year and reduce annual GDP by 1.04 percent.
The data makes it clear: Congress needs to reassert itself in fulfilling its constitutional duty “To regulate Commerce with foreign Nations” and legislate an end to this harmful trade war. That is why we joined 37 other organizations to urge members of Congress to support the bipartisan Congressional Trade Authority Act. This legislation would require Congress to weigh in on any proposed tariffs based on national security grounds. It would also shift to the Department of Defense, which has the expertise on national security, the responsibility for determining national security threats caused by imports, instead of the Department of Commerce, which does not.
For two years now taxpayers have been stuck in President Trump’s twilight-zone trade war with nothing to show for it but economic pain for American businesses and increased costs for taxpayers. It’s time for Congress to find a way out of this expensive, own-goal morass.