Regardless of whether you support President Trump’s tariffs as a negotiating tactic or whether you view them as harmful and unlikely to net a better deal, my Christmas wish is that the U.S. and China reach a pro-growth trade agreement before the holidays. A recent string of headlines makes clear that continuing the ‘economic cold war’ is in neither party’s interest, and I hope my wish is shared by those on both sides of this debate.
A look at China’s stock market over the past year suggests the tariffs have been a significant drag on the Chinese economy. But the U.S. has not escaped unscathed either — tariffs are widely believed to be a significant factor in America’s ongoing market correction that has already wiped out the entire gains of the Dow Jones Industrial Average for the year. It is also speculated that Trump’s tariffs played a role in General Motors’ recently announced layoffs in Ohio and Michigan.
In addition to weighing down the stock market and costing American jobs, a study commissioned by ImpactECON also revealed that Trump’s tariffs have placed a large cost on America households. The report found that:
Tariffs stemming from President Donald Trump’s trade conflicts could cost Americans $915 each, or $2,400 per household, in the form of higher prices, lower wages and lower investment returns in 2019, according to a new study.
If the tariffs stay in place, the study says, the losses would add up to $17,300 per household by 2030.
The study predicts steep long-term job losses. While strong economic growth in the U.S. initially will protect workers from job losses, the tariffs will lead to the loss of 2.75 million American jobs, the study predicts. Low-skilled workers in agricultural and manufacturing jobs would be hit the hardest under this scenario. In addition, the study figures an additional 700,000 workers will lose jobs but be able to find work in other industries.
Meanwhile, the study expects the tariffs to sap $365 billion from U.S. GDP next year. Overall, it expects GDP losses to total $2.8 trillion from 2019 to 2030.
The U.S. and China would be hurt most by the tariffs.
And lastly, let’s hope the U.S. and China are able to reach an agreement so that we won’t find ourselves paying more for Christmas presents next year. As Nathan Nascimento noted for Investor’s Business Daily:
While some analysts say it’s possible that the worst price increases will not come until after the holidays, for many items you won’t have to wait for the Christmas rush to feel the effects. The administration’s actions on trade are already driving up the cost of items Americans buy every day — staples such as toilet paper and toothbrushes, car seats and mattresses.
For lower and middle-income families who can’t afford to pay more, the impact could be particularly painful. And, unless the tariff tit-for-tat ends, the pain will be sustained.
Although both the U.S. and China seem far apart on the issue of trade now, Bloomberg reports that President Trump and Xi Jinping will meet over dinner this Saturday at the G-20 Summit. No matter where you stand on the tariff debate, let’s hope for the ‘Christmas Miracle’ that they reach an agreement.