Free Trade Economists Fail: China Paying for Trump Tariffs - Not U.S.

Free trade economists’ claims for months that the United States would be crippled by President Trump’s tariffs on $250 billion worth of Chinese products have been debunked by new research that shows it is China paying for the tariffs, not the U.S.

The free trade apparatus of Wall Street, Washington, DC, and the big business lobby repeatedly claimed over the course of the last year that Trump’s 25 percent tariffs on $250 billion worth of Chinese goods would hurt the U.S. and American consumers.

Research by EconPol Europe reveals that the vast majority, 20.5 percent of the 25 percent tariff is being paid by China while only 4.5 percent is being paid by the U.S.

The research notes that the tariffs will have the intended economic nationalist impact that Trump — and his loyal advisers Wilbur Ross and Peter Navarro — were hoping for in that they will reduce the U.S.-China trade deficit by 17 percent and cut down the number of Chinese imports in the U.S.

Trade expert and blogger Alan Tonelson wrote that the study proves Trump should stay strong in his effort to make the U.S. less reliant on Chinese imports.

“So although this study isn’t the last word on the U.S.-China trade wars, it provides important support for the Trump approach purely in economic terms,” Tonelson writes.

“Coupled with America’s vital strategic stake in preventing China from stealing and subsidizing its way to greater global competitiveness in the high tech and advanced manufacturing industries crucial both to U.S. national security and prosperity, it’s a strong signal for the President to stay his current China course – and even to move more explicitly to disengage America from what clearly has been a losing and increasingly dangerous relationship,” Tonelson notes.

The findings are a direct contradiction of the free trade brain trust. For example, Forbes claimed in September that Trump’s tariffs on China would hurt the U.S. more than China:

Likewise, the Associated Press in July highlighted “experts” who said Trump’s tariffs would hurt American workers and the U.S. rather than China:

Instead, many analysts say they expect the Trump administration to impose more tariffs on China and potentially other key U.S. trading partners. With those nations almost certain to retaliate, the result could be higher prices for Americans, diminished export sales and a weaker U.S. economy by next year.

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“People are underestimating what we’re headed for,” said Rod Hunter, a lawyer who served as a White House economic adviser under President George W. Bush. “He’s been saying since the ’80s that trade deals are bad and we should have more tariffs, and that’s what we’re getting.”

Likewise, the governor of the Bank of England Mark Carney claimed in June that the tariffs on China would hurt the U.S. going as far as to say a trade war with China would reduce U.S. GDP.

“[Mark Carney] revealed forecasts made by Threadneedle Street showing the American economy would suffer a 2.5% drop in GDP as a result of falling trade volumes alone over three years, should the White House increase US import tariffs by about 10 percentage points on all of its trading partners,” the Guardian reported.

Free trader Dan Hutcheson of VLSI Research Inc. told MarketWatch last month that Trump’s tariffs would hurt U.S. tech conglomerates’ billion dollar profits.

“Here are two ways tariffs will slow industry growth: Prices will be raised, and it will create uncertainty,” Hutcheson said. “Higher prices across all goods affected will cause companies to be uncertain about demand for electronics products in the upcoming holiday season. If they are not confident that the market will be there, they will hold off buying semiconductors to build inventories for the holidays.”

For months, Silicon Valley has complained that tariffs will make importing their Chinese-manufactured products back into the U.S. more expensive and cut into their profit margins. The tech companies, though, could avoid the Chinese tariffs by moving their production back to the U.S.

As Breitbart News reported, Trump’s recently imposed 10 percent tariffs on $200 billion boosted American manufacturing orders for communications equipment, computers, appliances, and fabricated metals. The increase in U.S. manufacturing orders on these tariff-protected goods reveals that Trump’s tariffs are working as intended, boosting domestic manufacturing while reducing reliance on Chinese imports.

There have been about 11,100 U.S. jobs created due to Trump’s protective tariffs as of August. On the other hand, there have been about 514 job losses directly tied to the tariffs. There are 20 times as many American jobs that have been created in the last six months thanks to Trump’s tariffs on imported foreign goods than jobs that have been lost.

A majority of nearly 60 percent of likely voters say it is important for Trump and Congress to “place trade restrictions on countries that violate trade agreements” to create more American jobs. Meanwhile, only 38 percent of likely voters said entering new free trade deals is the most important means to creating U.S. jobs.