President Donald Trump is known for his haywire decision making since he assumed the office in 2016. One of such strategies by Trump is to use import tariffs to boost the US manufacturers. However, the data suggests that this move was unsuccessful. According to a Federal Reserve study released earlier this week, Trump’s tariffs strategy has backfired and led to higher prices and job losses.
The tariffs reduced the competition for some domestic industries in the US market. The study found that this was more than offset of rising input costs and retaliatory tariffs. Federal economists Justin Pierce and Aaron Flaaen, in their academic paper, concluded that “We found out that 2018 tariffs are linked with relative reductions in manufacturing employment and relative increases in producer prices. While the long-term effects of the tariffs might differ from the current estimations, the results indicate that tariffs have not led to increased activity in the US manufacturing sector.”
Federal Reserve study also gave insight into the type of industries that we effected by Trump’s tariffs decision. The top ten manufacturing industries affected by foreign retaliatory tariffs were producers of hardware things like motor vehicles, iron, and steel, aluminum sheet, leather goods, household appliances, sawmills, magnetic and optical media, audio and video equipment, computer equipment, and pesticide. Other industries were hit by higher prices as well. Some of the sectors suffered from both. They are - general-purpose machinery, household appliances, transportation equipment, secondary aluminum smelting, aluminum sheet, boilers, forging, primary aluminum equipment, steel product, architectural metals.
The researchers didn’t specify the companies, but it is also expected that the US-China trade war in the past 18 months also affected the sales of some key US industries like NVIDIA, Apple, Tesla, General Motors. Former Vice President Joe Biden slammed Trump’s tariffs decision from his official Twitter handle.
We all said that Donald Trump’s trade war would lead to job losses and higher prices.— Joe Biden (@JoeBiden) December 31, 2019
And now, it’s leading to job losses and higher prices.
I didn't read “Art of the Deal,” but this is the textbook definition of a failed negotiation. https://t.co/6xnbWRqtsC
Dr. Dhillon Randeep
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