After Donald Trump advanced his trade war with a series of tariffs, the president expressed great confidence that his gambit was as effective as it was wise. The Republican spent months arguing that his policy was pumping billions of dollars into the treasury, while shielding American jobs and boosting the domestic economy.
The first part of his pitch was obviously wrong -- assertions that tariffs generated government revenue suggest Trump has never fully undersood the basics of his own policy -- but the rest of the president's argument appears to have collapsed, too. Marketwatch reported:
President Donald Trump's strategy to use import tariffs to protect and boost U.S. manufacturers backfired and led to job losses and higher prices, according to a Federal Reserve study released this week.
"We find that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices," concluded Fed economists Aaron Flaaen and Justin Pierce, in an academic paper.
The same report added, "We find that U.S. manufacturing industries more exposed to tariff increases experience relative reductions in employment as a positive effect from import protection is offset by larger negative effects from rising input costs and retaliatory tariffs."
In other words, Trump embraced a tariff strategy to, among other things, boost the U.S. manufacturing sector. The evidence suggests this backfired, hurting those the president intended to help.
I imagine White House officials, if they acknowledge the Fed's report at all, will argue that the findings must be wrong because economic growth was healthy and steady in 2019, as was job growth. If Trump's tariff gambit had actually backfired, they'll argue, the economy would be in much worse shape.
This fails to acknowledge a few relevant details.
First, GDP growth in 2019 was fine, but modest by historical standards. Trump likes to insist Americans are seeing the most robust growth ever, but it looks like the economy grew slower in 2019 than in 2018, and both years will fall short of the growth we saw in 2015 -- when Trump launched his candidacy and told the public the economy was terrible.
The second is that job growth in 2019 was also fine, but while we wait for December's data, it appears last year was among the worst for job growth in the last decade.
And third, the broader point isn't that Trump's tariffs made the economy terrible; it's that the economy would've been in even better shape had the president not pursued a counterproductive strategy.