IT DIDN'T WORK THEN AND IT WON'T WORK NOW

As president, Trump promised that tariffs would "bring back jobs" to the United States. It backfired, though: There was a net job loss, not a gain. Now, here he is again proposing more of the same.

Beautiful. Or, more precisely, “the most beautiful word in the dictionary.”

That’s how DJT— Donald J. Trump—described tariffs in a speech before the Economic Club of Chicago.

And make no mistake about it, outside of tax cuts for fat cats, nothing gets DJT gassed up more than tariffs— a tax or duty imposed by one country on the goods and services imported from another country.

Indeed, Trump touts tariffs as a sort of economic magical wand capable of, among other things, increasing employment, rebuilding and shoring up the nation’s manufacturing basis, shrinking the federal debt, lowering the cost of childcare and—get this— even rendering the income-tax system anachronistic.

In fact, he’s so gassed up over the supposed curative power of tariffs, he’s talking straight up crazy, promising to slap an across the board tax of at least 10% on all imported goods, with especially heavy hits of 60% and 100% waiting for Chinese goods and all imported cars, respectively.

Oh, and let’s not forget that, on at least one occasion, he has hinted toward an import north of 200% on vehicles imported from Mexico:

All I’m doing is saying I’ll put 200 or 500, I don’t care. I’ll put a number where they can’t sell one car. I don’t want them hurting our car companies.

Trump’s tariff hikes would be like nothing we’ve ever seen before and, unsurprisingly, he justifies and whips up support for all of this by claiming, among other things, that these taxes on imports will reward U.S. workers with increased employment opportunities.

The problem, though, is this: There’s no empirical evidence for accepting the claim that Trump’s tariffs will result in an overall net increase in employment.

WE’VE BEEN HERE BEFORE WITH TRUMP

The reality is that we’ve been here before with Trump. As the Tax Foundation, a non-profit that conducts research on the impact of tax structures and proposals on economic health, observes:

The Trump administration imposed several rounds of tariffs on steel, aluminum, washing machines, solar panels, and goods from China, affecting more than $380 billion worth of trade at the time of implementation and amounting to a tax increase of nearly $80 billion.

Imported steel, aluminum, washing machines, solar panels from most countries, with China being singled out for especially elevated tariffs.

All of this was part of Trump’s America First trade policy and, as the BBC noted in December 2018:

From Spanish olives to Canadian steel, no corner of the world has been untouched by US trade tariffs - a tax on foreign products - since President Trump entered the White House.

What all of this means is that there’s ample opportunity to gain insight into the likely impact of Trump’s current tariff proposals by looking at what actually happened with past Trump tariffs, by examining, that is, whether the taxes on imported goods that he implemented during his presidency resulted in increased employment levels for U.S. workers.

For one thing, this is important because if it didn’t “work then”— if it didn’t bestow job gains on workers— then there’s reason to suspect, to put it charitably, that it won’t “work now.”

DID IT WORK THEN AND IT WON’T WORK NOW

Well, here’s the deal: There’s growing evidence that it didn’t “work then” and, correlatively, that there’s no reason to expect it to “work now.”

Stated somewhat differently, the evidence strongly suggest that the tariffs imposed during the Trump presidency actually resulted in a net job loss and that there’s little reason for believing that workers would be beneficiaries of a new round of even higher tariffs should he manage to return to the Oval office.

Consider, for instance, this finding from a study sponsored by the Federal Reserve:

We find that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices. For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs. For producer prices, the effect of tariffs is mediated solely through rising input costs

You catch that?

Just in case you didn’t: This Fed sponsored research project finds that the Trump tariffs implemented during his presidency actually did the exact opposite of what the then president had predicted: It lowered, not raised, manufacturing employment.

What Trump and his crew rarely, if ever acknowledge is this: If country A imposes a tariff on goods imported from country B, the latter—country B— could very well retaliate by imposing a tariff or tax on goods exported from country A. Job losses by those working in country A’s export industries can more than wash out any gains in A’s industries protected from country B’s imports. The result can be—and is, according to the Fed study— a net loss in jobs.

A Brookings report also concludes that Trump’s tariffs did the exact opposite of what he and his team predicted: When countries were slapped with large tariffs, they retaliated by “returning the favor”: They placed a tariff on goods that U.S. companies exported across the globe:

But any benefits for workers in import-competing industries need to be balanced against losses for two other groups of workers. First, many workers are employed in factories that use imported goods as inputs in their production processes, and when these imports increase in cost due to tariffs, it harms their production, often leading to job losses. Second, when the U.S. unilaterally imposes tariffs, American trading partners often implement retaliatory tariffs which may limit U.S. export production, again ultimately harming workers in these industries.

The report continues:

In general, then, Trump’s tariffs have helped some workers and hurt others. Nothing is particularly surprising about this; trade policy almost always has important distributive effects, and any change in trade policy is a choice to benefit some groups at the expense of others. Yet, overall, when economists have attempted to add up the net effect of Trump’s tariffs on jobs, any gains in importing-competing sectors appear to have been more than offset by losses in industries that use imported inputs and face retaliation on their foreign exports.

Finally, economist David Autor and his colleagues also find that the Trump’s tariffs failed to accomplish its stated goal “to bring back jobs to America”:

The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies

So, no it “didn’t work then” and there’s very little, if any reason, to think “it will work.” Were he to be elected again to the office of the presidency, his tariff proposals—if implemented— would likely do the same thing they did during his previous reign as president: Backfire and create a net job loss.

It didn’t work then and it won’t work now.

Only this time the tariffs would be much higher, the retaliation much more robust, and the job loss even greater than before.