If all announced tariffs are enacted, long-run GDP will decline by $148.33 billion.
Roughly 460,000 jobs will be eliminated due to the tariffs.
The tariffs will offset a third of the Tax Cuts and Jobs Act.
The Trump administration has enacted trade tariffs which will affect goods that come into the United States from several countries, and those countries — such as Mexico, China, Canada and others — have responded with tariffs of their own.
These tariffs will not only affect the prices U.S. consumers pay for goods and services, they will also affect jobs. According to the Tax Foundation, the tariffs already imposed and those to be implemented could eliminate nearly half a million U.S. jobs.
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The Tax Foundation said that the first round of tariffs would have these effects:
GDP would be reduced in the long run by 0.12 percent, or $30 billion.
Wages would be reduced by 0.08 percent.
More than 94,000 full-time jobs would be eliminated.
The foundation also estimates that tariffs on automobiles and parts and other products from China will cause these additional effects:
GDP would fall another 0.38 percent, or $94 billion.
Wages would be reduced by another 0.24 percent.
Over 292,000 additional jobs would be eliminated.
China is not the only country affected. Other countries, such as India, Turkey and the European Union, have threatened tariffs on goods exported from the U.S. If these tariffs are enacted, the Tax Foundation estimates the following effects:
GDP will further decline by 0.09 percent, or $23.5 billion.
Around 72,800 additional jobs would be lost.
The total impact of the tariffs that have been announced by both the U.S. and other countries would result in:
An overall decline in GDP of 0.59 percent, or $148.33 billion.
Wages are projected to decline by 0.38 percent.
Nearly 460,000 jobs would be eliminated in total.
The figure of $148.33 billion, the overall decline in GDP, represents one-third of the long-run impact of the Trump administration’s Tax Cuts and Jobs Act, which is projected to cost $1.5 trillion.
Despite President Donald Trump’s claim that the U.S. has been treated “unfairly” by its trade agreements with other countries, economists are generally in agreement that free trade increases economic output and benefits income. Trade barriers, such as tariffs, have a negative effect on economic output and income, by increasing prices and reducing the number of goods and services that are available to consumers.
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