WASHINGTON – President Donald Trump’s trade battles cost the U.S. economy $7.8 billion in lost gross domestic product in 2018, according to a study by a team of economists at leading American universities.
The authors of the new paper said they had analyzed the short-run impact of Trump’s actions and found that imports from targeted countries declined 31.5 percent, while targeted U.S. exports fell by 11 percent. They also found that annual consumer and producer losses from higher costs of imports totaled $68.8 billion.
“After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8 billion,” or 0.04 percent of GDP, the researchers said.
The study was authored by a team of economists at the University of California, Berkeley, Columbia University, Yale University and the University of California at Los Angeles (UCLA) and was published by the National Bureau of Economic research.
Having dubbed himself the “tariff man,” Trump pledged on both the campaign trail and as president to reduce the trade deficit by shutting out unfairly traded imports and renegotiating free trade agreements.
Trump has pursued a protectionist trade agenda to shield U.S. manufacturing. Washington and Beijing have been locked in a tit-for-tat tariff battle, and Trump has imposed tariffs that have roiled other major trading partners.
As China and the U.S. work to end the trade war, China’s parliament on Friday approved a law aiming to create a transparent environment for foreign firms.
The authors said that although U.S. tariffs favored sectors located in “politically competitive” counties, the retaliatory tariffs imposed on U.S. goods have offset the benefits to these areas.
“We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war,” the researchers said.