2022-02 Costs of trade wars

Between 2018 and 2020, the United States imposed massive new tariffs under a variety of trade laws, most notably the Section 301 tariffs against China. This new protection is extensive in magnitude and breadth; tariffs range from 10 to 30 percent and cover 50 percent of US consumer imports from China and 16 percent of total US consumer imports. Using data from the Consumer Expenditure Survey, I estimate that these tariffs cost the average US household at least $160 per year. I further find that the new taxes are highly regressive; the lowest income consumers pay more than 1.2 percent of their after-tax income to fight these trade wars, while the wealthiest consumers pay just 0.18 percent of their after-tax income. I find additional evidence that women and parents are paying an unfair share of efforts to put America first. While the current Administration has proposed to raise taxes on the wealthy to make the US tax system fairer, they should also eliminate tariffs which place undue burdens on the most vulnerable in our society.