ICYMI: Fed Study Shows Tariffs Hurt American Manufacturing

Good afternoon – 

The Federal Reserve released a study over the weekend that found the trade war – and most notably the tariffs – have hurt American manufacturing rather than helping it. The study finds “the tariffs imposed by the Trump administration in 2018 led to higher prices and fewer manufacturing jobs.”

The authors of the report, two economists at The Fed, also explain how the argument that the negative impact of tariffs are “worth” the short-term pain because they are boosting American businesses is flawed:

“While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices.”

This report is the most recent piece of proof of the significant damage the tariffs are causing American manufacturing — the industry they are supposedly trying to help. According to the Institute for Supply Management (ISM), the manufacturing industry has contracted four months in a row, with ISM Chairman Timothy Fiore, “Global trade remains the most significant cross-industry issue.” And as American manufacturer Dan Digre recently told NPR, the tariffs are slowly driving him out of business and potentially forcing him to move production overseas:

“‘We’re trying to keep building speakers here in the U.S., but there’s only a couple of us left in the country to do it,’ Digre says. ‘And if these tariffs go on a lot longer, I don’t know if there will be anybody left in this country to do it.’ Ultimately, Digre says, he might have to move his whole factory overseas — exactly the opposite of what the president said he wanted when he started this trade war.”