President Donald Trump’s trade strategy over the past year cost the American economy $7.8 billion dollars in lost gross domestic product, according to a new study authored by a team of economists at the University of California Berkeley, Columbia University, Yale University and University of California at Los Angeles (UCLA).
Authors of the paper, which is entitled “The Return to Protectionism,” said they analyzed the short-run impacts of “the 2018 trade war” on the U.S. economy.
By estimating import demand and export supply elasticities using changes in U.S. and retaliatory tariffs over time, the researchers 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 effect was a $7.8 billion loss. Without tariff retaliations, the impact on the U.S. economy would have been negligible – amounting to one-third of that value, the authors said.
The researchers aid the negative economic impacts are spread throughout the United States, including politically competitive counties for Republicans. “U.S. tariffs favored sectors located in politically competitive counties, but retaliatory tariffs offset the benefits to these counties,” the report authors state. “We compute that tradeable-sector workers in heavily Republican counties are the most negatively affected by the trade war.”