The stakes just got higher in what many worry is a burgeoning trade war. President Trump on Friday announced new 25 percent tariffs on $50 billion worth of Chinese imports Friday, and China quickly retaliated by announcing 25 percent tariffs to take effect July 6 on $34 billion worth of U.S. products.
“Historical evidence shows that tariffs raise prices and reduce available quantities of goods and services for U.S. businesses and consumers,” the Tax Foundation’s Kyle Pomerleau and Erica York wrote Thursday in anticipation of the announcement, “which results in lower income, reduced employment, and lower economic output.”
Updating the Foundation’s Taxes and Growth model analysis of the economic costs of the tariffs, Pomerleau and York concluded that, “These tariffs would result in GDP and wages falling by 0.06 percent in the long run, and more than 45,000 fewer full-time jobs. The tariffs would fall more on middle- and lower-income taxpayers, making the distribution of the tax burden less progressive.”