New Study Shows Trump's Trade War Was a Failure

February 2022 - A new study by the Peterson Institute for International Economics (PIIE) confirms what most American business leaders and economists had predicted: the world-wide tariffs put in place by Donald Trump in 2018 hurt the U.S. economy more than they helped us and the Chinese treated them as just another bump in the road on their path to becoming a world economic superpower.

That doesn't mean U.S. trade policy didn't need to be modified (we agree with most Democrats that it did need to be changed and still does need to be changed), but the amateurish way Mr. Trump went about it showed us one of two things: either he doesn't understand how international economics works or he instituted his tariffs more for domestic political purposes (to show his naïve base how "tough" he was) than to achieve actual economic benefits. Or, more than likely, it was a combination of the two.

(image from National Hog Farmer)

Here are some of the key specifics from the Institute's study:

• Following imposition of Mr. Trump's across-the-board tariffs, imports from China did fall, which initially did hurt the Chinese. But China then retaliated and instituted their own trade tariffs which hurt American exporters, a big part of which was the American agricultural sector. Oops.

  
  

• Had no tariffs been in place, and had the U.S. percentage of Chinese imports remained the same as it was in the pre-tariff year of 2017, then U.S. exports to China would have been $119 billion more than they were during the period 2018-2021.

  
  

• In addition, the $30 billion dollar bail-out program that the Trump administration established to help U.S. farmers who had been hurt by the Trump tariffs (and which other studies have shown went mostly to large corporate farmers) wouldn't have been necessary and those dollars would not have added to Mr. Trump's record budget deficits.

  
  

• Lastly, in January 2020, Mr. Trump had signed a new trade deal with China in which China committed to buy a specified amount of goods from America. Unsurprisingly, though, given the consistently poor quality of work coming out of the Trump administration, there was no enforcement clause in the deal and, over the past two years, China has only purchased 57% of the amount agreed upon in that 2020 trade agreement.

Trying to counter the results of the PIIE study, some have tried to argue that Covid must have had an effect on the dampening of U.S. exports to China. Good thought, but that doesn't look to be the case, though. The PIIE reports that U.S. exports of goods and services were nearly back to pre-pandemic levels in 2021 and exports of goods alone hit record levels last year. Those numbers would have been even higher and our economy even stronger had we been able to sell more goods to China.

(Image from Bloomberg)

It should be noted that President Biden has not removed the Trump tariffs on China yet, although he has moved forward with the elimination of many of the same tariffs from our European allies. Unlike Mr. Trump, who withdrew from President Obama's Trans-Pacific Partnership trade deal without getting any reciprocal benefit from China (see more on that mistake in the second half of our article 'Dealmaker' Trump Botches Another Opportunity), Mr. Biden's policy is to negotiate the removal of the Chinese tariffs as part of a larger agreement that actually will benefit the U.S.

Most observers believe that a Biden trade agreement not only will push the Chinese Communists to address their economic misbehavior towards us, but it also will address issues of human rights and democracy within China. And maybe we'll even get more details on just how the Covid pandemic got started in Wuhan.

That's how big boys handle foreign relations.

(For more details on the PIIE study, you can check out the many legitimate internet sources that carried this story in early February. One of the sources that we used is from Yahoo Finance: "Trump's Trade War Flops")