Trump’s Trade War with China Cost Us TRILLIONS of Dollars
On This Day In 2018
Writing in Salon last week, Charles Davis argued that playing up Tim Walz’ “weird” characterization is a uniquely effective strategy for Dems. “Trump is not a normal opponent who one should (or can) engage in a high-minded debate about tariffs and industrial policy. He’s a clown: scary, but often sad and ultimately a joke.”
While we agree Trump is a weird clown, we feel that remembering why his Administration was so bad for our nation is equally important. So, we believe that reviewing his tariff policy is a useful way to fight the plague of Trump Amnesia. Especially true today, as we sum up this unexpectedly horrific trillions-dollar impact of Donald Trump’s program.
Trump’s anti-China crusade cost America dearly. His much-touted trade war was a failure on nearly every level, hurting the American economy while doing little to improve China’s behavior as a world power. OTDI 2020, the Brookings Institute released a report that laid bare the full extent of the damage, quoting from a range of impartial, non-political sources:
Moody’s Analytics concluded the trade war had cost the American economy nearly 300,000 jobs and an estimated 0.3% of GDP.
Bloomberg estimated the cost to America of the trade war at $316 billion, not fully including the hit to stock market investments.
The Federal Reserve Bank of New York and Columbia University calculated U.S. companies had lost more than $1.7 trillion in the price of their stocks as a result of tariffs imposed on Chinese imports.
The American Farm Bureau stated “farmers have lost the vast majority of what was once a $24 billion market in China” as a result of Trump’s ill-conceived campaign.
(Obviously the total hit to our economy has continued to soar in the four years since these analyses were conducted, as many of his tariffs proved hard to remove. And, note, Biden/Harris has implemented some tariffs too, but those have been targeted to boost American industries vital to the 21st century, and weren't seemingly indiscriminately applied.)
Trump’s plans were also pretty disastrous for U.S. taxpayers. In a separate report, the nonpartisan, not-for-profit Tax Foundation found that, by levying tariffs on around $380 billion worth of products, “the Trump administration imposed nearly $80 billion worth of new taxes on Americans,” amounting to “one of the largest tax increases in decades.”
In the end, Trump proved himself a lousy dealmaker. His trade war offensives continued until the “Phase One” agreement of October 2019, through which China agreed to purchase $60 billion more in U.S. goods than it had in 2017. A win for Trump? No, because there was no enforcement mechanism to truly hold China to that agreement.
As the Brookings Institute summarized:, “President Trump accepted an IOU as a declaration of victory.”
2024 update
It’ll come as no surprise when we tell you that of course China used those loopholes to get out of their obligations. Thus, key parts of Phase One were deemed to have “failed spectacularly.”
Dive Deeper
Check out the full Brookings Institute Report
See how the Tax Foundation tracks the economic impact of the saga
The Phase One assessment