High costs of Trump’s trade war
Last week, the Trump administration announced a plan to bail out farmers negatively impacted by retaliatory tariffs. The cost? $12 billion. That’s a high price to pay for a trade war President Trump shouldn’t have even been able to start in the first place. The United States Constitution grants Congress, not the president, the power to regulate trade.
Yet, thanks to the ongoing failure of Congress to do its job and preference for ceding power to the executive branch, here we are.
The U.S. Chamber of Commerce has crunched the numbers and calculated what the cost would be of bailing out all industries harmed by the unfolding trade war.
According to the Chamber, “such an aid package would cost U.S. taxpayers an estimated $39 billion – $12 billion already extended to agriculture plus an additional $27 billion to support other affected sectors.”
Though the administration hasn’t yet shown a willingness to broaden its bailout plan to non-agricultural industries, it should eventually dawn on anyone with any concern for the practical consequences of government policies that Trump’s trade policy is doing far more harm than good.
“The administration’s focus should be expanding free trade and removing these harmful tariffs, not allocating taxpayer’s money to only marginally ease the suffering for some of the industries feeling the pain of the trade war,” wrote Neil Bradley, Executive Vice President and Chief Policy Officer of the U.S. Chamber. Bradley’s right. While Trump has, depending on the moment, seemingly oscillated between being a principled protectionist to a free trader who is only using protectionist rhetoric and policy to press for freer trade, his motives don’t change the fact that his trade policies to date have been harmful to the United States.
Tariffs increase costs to consumers and undermine the competitiveness of American companies. According to the Tax Foundation, “the tariffs enacted so far by the Trump administration would reduce long-run GDP by 0.06 percent ($15.7 billion) and wages by 0.04 percent and eliminate 48,585 fulltime equivalent jobs.”
Further tariffs could only threaten hundreds of thousands of additional jobs.
There’s nothing great about that.
Trump might be a brilliant negotiator – I haven’t seen any evidence of this as long as he’s been president – but that should be irrelevant even if that’s true.
Congress should take away Trump’s ability to plunge the U.S. into a trade war and reassert Congress’ role in trade policy.
The U.S. Chamber of Commerce has crunched the numbers and calculated the cost of bailing out all industries harmed by the unfolding trade war. According to the Chamber, such an aid package would cost U.S. taxpayers an estimated $39 billion including the $12 billion already extended to agriculture.