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Trump's China Tariffs Risk Costing U.S. Jobs, New Study Shows

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(Bloomberg) -- President Donald Trump says his trade actions may cause "a little pain” in the short term, and a new study shows U.S. agricultural workers could be hurt the most.

The tariffs on $50 billion in Chinese imports that Trump has proposed, plus promised retaliatory duties by China, would reduce U.S. gross domestic product by $2.9 billion and cost almost 134,000 U.S. jobs, according to a study commissioned by the Consumer Technology Association and the National Retail Federation, which oppose the tariffs. That includes more than 67,000 jobs in agriculture.

States that Trump won in 2016 would lose about 77,500 positions, the study found.

As Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin and other administration officials head to China this week for trade talks, the study shows the estimated impact on the American economy if the tariffs are imposed and a trade war ensues, the groups said.

“We must resolve this dispute without resorting to job-killing tariffs and retaliation,” National Retail Federation President and Chief Executive Officer Matthew Shay said in a statement.

The Trump administration has targeted more than 1,300 Chinese products, from televisions and backhoes to ingredients for insulin, for tariffs of 25 percent in response to complaints about China’s theft of intellectual property.

Threats and Counter-Threats

That prompted China to promise retaliatory duties on soybeans, aircraft and other products. Trump then ordered consideration of an additional $100 billion in tariffs that the administration hasn’t yet identified.

The study, completed by the Washington-based consulting firm Trade Partnership Worldwide LLC, estimated the effect on employment under different scenarios. The most probable scenario has the U.S. imposing $50 billion tariffs with promised Chinese retaliation, according to the study.

Under that scenario, some sectors, including machinery and electronics manufacturing, would add jobs as reduced imports bolster U.S. production, the study found. But for every job gained, more than four would be lost during the first years after tariffs were imposed as higher prices reduce consumer spending and farmers in particular are hammered by Chinese duties, the study said.

“Rising costs on farmers, manufacturers and service providers isn’t the answer,” Gary Shapiro, chief executive and president of the Consumer Technology Association, said in a statement. “It shows protectionism will weaken America.”

Ross and other administration officials have downplayed the effect of the tariffs on the U.S. economy. Trump has acknowledged that American markets and farmers could face “a little pain” but that the country would be better off in the long term.

“Short term, you may have to take some problems,” Trump said during an April 28 rally in Michigan’s Washington Township. “Long term, you’re going to be so happy.”

That White House has to prove that assumption, said David French, senior vice president of government relations at the National Retail Federation.

“Our view is that tariffs and trade wars are a measurable loser for the U.S. economy,” French said.

The Retail Federation, Consumer Technology Association and other trade groups have been working together and separately to lobby the administration to strike a deal with China that avoids tariffs, and otherwise to exclude specific products from the list. Companies are making requests to have products removed or added, with a public hearing set for May 15 in Washington.

“The best thing we can all do is just try every avenue and eventually, something hopefully will stick,” said Sage Chandler, vice president for international trade at the Consumer Technology Association.

While it’s a good sign the U.S. is talking with China and it’s appropriate to address concerns about China’s trade practices, the administration’s proposed approach is not the answer, French said.

“It’s the methods, it’s the tactics, it’s the uncertainty, it’s the impact on our supply chains that we’re trying to communicate, and I’m just not convinced they’re listening at this point,” he said.

©2018 Bloomberg L.P.

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