Author Topic: Did the tariffs have a net benefit so far?  (Read 928 times)

TheDrake

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Did the tariffs have a net benefit so far?
« on: February 13, 2020, 12:17:55 PM »
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On balance, CBO expects trade barriers to reduce U.S. output. The effects of the tariffs on trade flows, prices, and output are projected to rise over the next year. By 2020, in CBO’s projections, those tariffs reduce the level of real U.S. GDP by roughly 0.3 percent and reduce average real household income by $580 (in 2019 dollars). Beyond 2020, CBO expects those effects to wane as businesses adjust their supply chains. By 2029, in CBO’s projections, the tariffs lower the level of real U.S. GDP by 0.1 percent.

CBO

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[Figure 4 presents our main result. The total drag on GDP from the two waves of trade tensions (the black solid lines) is expected to increase through early 2020, cumulating to an impact of just above 1 percent. The effects are similar across the United States, the AFEs, and the EMEs. The blue dashed lines show the effect on GDP of the first wave of TPU alone. Had trade tensions not escalated again in May and June of 2019, the drag on GDP would have already started to ease in the second half of 2019.

The Fed

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Some studies account either explicitly or implicitly for increased profits and wages in industries protected by the new tariffs and for tariff revenues as a source of government revenue. While the imposition of tariffs may make the economy less well off in general, this does not mean that it is a loss for everyone: tariffs generate gains for some firms. For instance, protection from foreign competition allows some firms to raise their price — increasing their profits and the wages they are able to pay. Like other taxes, tariffs also are a source of government revenue. Taking this into account can affect estimates of the overall cost of tariffs: one study that includes these factors (but does not include the broader uncertainty) finds net effects from the 2018 tariffs as low as $61 per household per year, on average. The empirical approaches by the Congressional Budget Office and the Federal Reserve Board of Governors implicitly allow for some benefits to be factored in, but still find net losses from changes in trade policy (with uncertainty) through June 2019 of roughly $500 to $1700 per year in 2020, averaged across households.

article


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A new report from the Fed’s Divisions of Research & Statistics and Monetary Affairs, titled “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” concluded that President Donald Trump's tariffs led to job losses in the manufacturing sector and higher prices for producers and consumers.

“Our results indicate that tariffs have been a drag on employment and have failed to increase output,” authors Aaron Flaaen and Justin Pierce wrote. A key production benchmark published earlier this month found that U.S. manufacturing shrank for the fourth straight month in November.

job losses due to tariffs

So no, they absolutely did not result in a net benefit.

Fenring

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Re: Did the tariffs have a net benefit so far?
« Reply #1 on: February 13, 2020, 12:23:51 PM »
It takes 5-10 years minimum for a new normal to set in after a significant change in monetary policy. Hard to say if this was a signficant change, but in any change the control factors are going to be tough to nail down even ideally. The fact that U.S. policy flops all over the place administration to administration greatly reduces my confidence that they have any capability of making short-term estimates of long-term effects.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #2 on: February 13, 2020, 12:26:49 PM »
I don't disagree that there can be long term effects that are hard to quantify. Some are claiming that tariffs have already paid off, that's what I'm looking at.

Pete at Home

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Re: Did the tariffs have a net benefit so far?
« Reply #3 on: February 13, 2020, 01:34:15 PM »
Does the study factor in other countries having to pick up the productivity slack from China’s issues with the Coronavirus?

Wayward Son

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Re: Did the tariffs have a net benefit so far?
« Reply #4 on: February 13, 2020, 06:08:42 PM »
Fenring, do you expect Trump's tariffs to last 5 - 10 years?

To paraphrase Keynes, in the long run, his tariffs are all dead. :)

Crunch

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Re: Did the tariffs have a net benefit so far?
« Reply #5 on: February 13, 2020, 07:08:29 PM »
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A new report from the Fed’s Divisions of Research & Statistics and Monetary Affairs, titled “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” concluded that President Donald Trump's tariffs led to job losses in the manufacturing sector and higher prices for producers and consumers.

“Our results indicate that tariffs have been a drag on employment and have failed to increase output,” authors Aaron Flaaen and Justin Pierce wrote. A key production benchmark published earlier this month found that U.S. manufacturing shrank for the fourth straight month in November.
job losses due to tariffs

So no, they absolutely did not result in a net benefit.


There are currently more people employed than ever before with unemployment at 3.6%. I’m don’t think  “net benefit” means what you think it means.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #6 on: February 13, 2020, 07:21:03 PM »
Okay, so we know the tariffs helped employment - how? The great unemployment numbers might all be because of tax cuts. Or deregulation. Or business euphoria.

Crunch

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Re: Did the tariffs have a net benefit so far?
« Reply #7 on: February 14, 2020, 12:41:47 PM »
I'm not claiming it helped, you're claiming it hurt the overall employment situation nationally. Given those numbers, how did it really hurt employment? It would be damn near impossible to get better than it is right now so if it actually did what you claim it did then it was an inconsequential effect in reality.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #8 on: February 14, 2020, 01:43:30 PM »
There's unemployment and there's underemployment, and there's people who stop actively looking for a job.

I invite you to read the study.

Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector

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Toward this end, we construct straightforward industry-level measures of exposure to each
of these three channels. We measure the import protection channel as the share of domestic
absorption affected by newly imposed tariffs. We account for declines in competitiveness
associated with increased input costs as the share of industry costs subject to new tariffs.
Finally, we measure an industry’s potential exposure to retaliatory tariffs by U.S. trading
partners as the share of industry-level exports subject to new retaliatory tariffs. We construct
these measures using detailed data on each industry’s input-output structure, trade flows,
and shipments, as well as information on the set of products covered by both U.S. and foreign
retaliatory tariffs. We then relate the measures for these three channels of tariff exposure to
monthly data on manufacturing employment, output, and producer prices.

Or you could just keep shouting about one single number which shows that everything is as great as it ever has been.

TheDeamon

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Re: Did the tariffs have a net benefit so far?
« Reply #9 on: February 14, 2020, 01:54:44 PM »
There's unemployment and there's underemployment, and there's people who stop actively looking for a job.

Going to admit I haven't looked at the link, but I will point out some other factors as well that tend to get under-stated:

The workforce is defined as anyone of legal age to work. This includes retired Baby Boomers, and/or semi-retired Baby Boomers who didn't properly plan for retirement. That 101-year old at the local care facility counts as a non-participant in the work force. The 78 year old part-time greeter at Walmart also counts as underemployed.

There also are a heck of a lot of Baby Boomers retiring or semi-retiring, the oldest of them are now 75 years old.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #10 on: February 14, 2020, 02:06:01 PM »
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What are the basic concepts of employment and unemployment?
The basic concepts involved in identifying the employed and unemployed are quite simple:

People with jobs are employed.

People who are jobless, looking for a job, and available for work are unemployed.

The labor force is made up of the employed and the unemployed.

People who are neither employed nor unemployed are not in the labor force.

Bureau of Labor Statistics unemployment methodology

But more specifically, the paper is describing the impact of tariffs on employment in the manufacturing sector. So if the guy who used to run a CNC machine falls back on a job in retail, it wouldn't move the needle on the unemployment number.

Crunch

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Re: Did the tariffs have a net benefit so far?
« Reply #11 on: February 14, 2020, 05:02:19 PM »
There's unemployment and there's underemployment, and there's people who stop actively looking for a job.

I invite you to read the study.

Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector

Quote
Toward this end, we construct straightforward industry-level measures of exposure to each
of these three channels. We measure the import protection channel as the share of domestic
absorption affected by newly imposed tariffs. We account for declines in competitiveness
associated with increased input costs as the share of industry costs subject to new tariffs.
Finally, we measure an industry’s potential exposure to retaliatory tariffs by U.S. trading
partners as the share of industry-level exports subject to new retaliatory tariffs. We construct
these measures using detailed data on each industry’s input-output structure, trade flows,
and shipments, as well as information on the set of products covered by both U.S. and foreign
retaliatory tariffs. We then relate the measures for these three channels of tariff exposure to
monthly data on manufacturing employment, output, and producer prices.

Or you could just keep shouting about one single number which shows that everything is as great as it ever has been.


There are other numbers. Want to talk about them? I suspect not.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #12 on: February 14, 2020, 05:30:45 PM »
I'm happy to look at any numbers you have that are specifically tied to tariffs. General economic indicators? None of them can tell you anything about the efficacy of tariff policies.

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #13 on: February 14, 2020, 05:56:05 PM »
This article follows the usual Trumpian arguments to justify the tariffs. It starts with anecdotes of companies that were positively helped by them. Then the author dismisses studies that attempt to control for confounding factors, practically calling the researchers liars. Then they talk about a huge manufacturing boom over 2017 and 2018, blame a flat 2019 vaguely on something else and take it home by accusing detractors of not looking at the actual data.

Well, here's the actual data. Looks like 2014 was pretty good too, without tariffs. Has it been a good couple of years? Absolutely. And it could have been any number of things, including other Trump policies.

Crunch

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Re: Did the tariffs have a net benefit so far?
« Reply #14 on: February 15, 2020, 07:43:07 AM »
I'm happy to look at any numbers you have that are specifically tied to tariffs. General economic indicators? None of them can tell you anything about the efficacy of tariff policies.

Wait p, do you believe the tariffs were part of an economic policy?

TheDrake

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Re: Did the tariffs have a net benefit so far?
« Reply #15 on: February 15, 2020, 10:19:23 AM »
Sure, but you shouldn't just lump everything together and call it good or bad. That's like saying you can't critique anything a coach decided in a game that he won.

The depth of understanding that led to trumps decisions doesn't stop it from being a policy, and even when he blurts out a tweet, he's creating a policy.

Fenring

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Re: Did the tariffs have a net benefit so far?
« Reply #16 on: February 18, 2020, 02:58:16 PM »
Fenring, do you expect Trump's tariffs to last 5 - 10 years?

No, because any political system whose main focus is re-election every 4 years cannot be serious about testing long-term policy. In fact there is a built-in system feature (not a bug) where it is in fact part of the stated policy of those running to undo the policies implemented by the other side. So for any policy or precedure whose scientific testing would require more than 4 years, the U.S. is simply not prepared to understand how these things work or whether they function at all.

TheDeamon

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Re: Did the tariffs have a net benefit so far?
« Reply #17 on: February 18, 2020, 07:12:47 PM »
Fenring, do you expect Trump's tariffs to last 5 - 10 years?

No, because any political system whose main focus is re-election every 4 years cannot be serious about testing long-term policy. In fact there is a built-in system feature (not a bug) where it is in fact part of the stated policy of those running to undo the policies implemented by the other side. So for any policy or precedure whose scientific testing would require more than 4 years, the U.S. is simply not prepared to understand how these things work or whether they function at all.

Four years? Sometimes the cycle can be reduced down to two years--the reelection cycle in the House of Representatives.