Tariffs Have Not Help the Manufacturing Sector
The current trade policy centered on tariff schemes did not protect or boost U.S. manufacturing as intended, a new study from the Federal Reserve has found; rather, the strategy backfired, leading to job losses and higher prices in that sector.
According to Market Watch, the academic paper authored by Fed economists Aaron Flaaen and Justin Pierce found “that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices.”
Though some U.S. industries saw reduced competition thanks to the tariffs, “this was more than offset by the effects of rising input costs and retaliatory tariffs,” Market Watch reported.
“While the longer-term effects of the tariffs may differ from those that we estimate here, the results indicate that the tariffs, thus far, have not led to increased activity in the U.S. manufacturing sector,” the economists wrote, adding that tit-for-tat trade retaliation should be relegated to the past due to now globally interconnected supply chains.
The report noted that the top ten manufacturing industries impacted by retaliatory tariffs included magnetic and optical media, leather goods, aluminum sheet, iron and steel, motor vehicles, household appliances, sawmills, audio and video equipment, pesticide, and computer equipment.
And the top ten to see higher prices included aluminum sheet, steel product, boilers, forging, primary aluminum production, secondary aluminum smelting, architectural metals, transportation equipment, general purpose machinery and household appliances.