Trump’s Planned China Tariff Hikes Could Slam U.S. Growth
Levies of 25% would induce a slowdown, undermining the president’s argument that duties are good for the economy.
Trump with Chinese Vice Premier Liu He at a meeting in the Oval Office of the White House on April 4, 2019.
Photographer: Andrew Harrer/Bloomberg
It’s an almost universal view among economists, derived from history, that tariffs and trade wars are bad for economies. Protect an industry, say, steel, from foreign competition, and you raise costs for a far greater number of domestic companies that depend on steel as an input. You also invite retaliation that hurts other parts of your economy—say, farmers. In short: Narrow short-term benefits lead to bigger and broader long-term costs.
But what if the leader of the world’s largest economy doesn’t believe that to be true? As he dialed up pressure on China over the past year and again in recent days, President Trump has increasingly seized on the idea that his trade wars are boosting U.S. growth and therefore strengthening his hand, according to people familiar with the White House’s internal deliberations, who asked not to be named because of the confidential nature of the talks.