One of the most consistent criticisms leveled against President Donald Trump’s trade policy is that tariffs will hurt the economy and cost jobs. But what if the exact opposite is true?
The CPA analyzed the potential impact of a permanent, across-the-board 25 percent tariff on all U.S. imports from China between 2020 to 2024, projecting it would contribute 0.5 percent of additional GDP in 2024.
Contrary to the claims of skeptics, the CPA’s assessment confirms that Trump’s trade policy functions exactly as advertised—by protecting domestic producers from unfair foreign competition, tariffs spur the creation of U.S. jobs and accelerate economic growth.
Of course, no one disputes that tariffs on goods from China will raise the prices of those particular imports—in fact, that’s the only direct consequence of such tariffs. That doesn’t mean consumers will necessarily find themselves paying higher prices in the stores, though. Just as raising the cost of Chinese imports makes domestic producers in some industries more competitive, it also encourages firms to move the production of some goods from China to lower-cost third-party countries, offsetting much or all of the impact on import prices in the United States.
While it might seem preferable for U.S. companies to pick up all of the slack created by tariffs on Chinese goods, there will always be some products that make more sense to import, since U.S. workers can be employed more productively in higher-value pursuits.
According to the CPA report, now is a particularly opportune time to impose across-the-board tariffs on China, because production costs in China have been rising “dramatically” in recent years. There are now nine countries with a lower manufacturing cost index than China, and tariffs would accelerate the process of shifting production from China to those countries, which some firms have already begun to do.
In other words, imposing 25 percent tariffs on goods from China might actually result in lower prices for U.S. consumers.
Economic benefits aside, there are other compelling reasons to consider the 25 percent across-the-board tariffs on China that the CPA envisions, starting with the fact that China has been waging economic war on the United States for decades—a 25 percent tariff would represent a proportional response.
Many have argued that stopping China’s hostile trade practices is worth whatever minor economic pain the United States might experience from tariffs, but the CPA analysis shows that Trump’s tariffs will actually help the U.S. economy in the long run.