People watch the performance of the boat of the New York City Fire Department before the firework event to celebrate the Independence Day of the United States in New York July 4, 2018. (Xinhua/Han Fang)
WASHINGTON, March 6 (Xinhua) -- U.S. tariff measures are actually causing net losses of billions of dollars to domestic consumers and importers, according to two latest studies by U.S. economists.
One of papers, published Saturday and titled "The Impact of the 2018 Trade War on U.S. Prices and Welfare," said that the U.S. government levied import duties on approximately 283 billion dollars' worth of U.S. imports over the course of 2018.
"Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers," argued Mary Amiti of Federal Reserve Bank of New York, Stephen Redding of Princeton University and David Weinstein of Columbia University, co-authors of the paper.
The researchers said they estimated that by the end of 2018, import tariffs raised costs for U.S. consumers and the firms that import foreign goods by 4.4 billion dollars a month. They found that domestic consumers and importers spent three billion dollars per month in added tax and bore the burden of another 1.4 billion dollars per month in deadweight welfare losses.
For the first 11 months of 2018, the cumulative deadweight welfare cost, or reduction in real income, from the U.S. tariffs was around 6.9 billion dollars, with an additional cost of 12.3 billion dollars to domestic consumers and importers in the form of tariff revenue transferred to the government, according to the scholars.
"We estimate that if the tariffs that were in place by the end of 2018 were to continue, approximately 165 billion dollars of trade per year will continue to be redirected in order to avoid the tariffs," said the paper, which was published by the London-based Centre for Economic Policy Research.
"We find that the U.S. tariffs were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters," the economists wrote, adding that they also found that U.S. producers responded to reduced import competition by raising their prices.
A separate study, titled "The Return of Protectionism" and done by economists including Pinelopi Goldberg, the World Bank's chief economist and a former editor-in-chief of the American Economic Review, reached a similar conclusion that U.S. firms and the American people are paying the price for U.S. tariff battle worldwide.
The paper, whose other authors are Pablo Fajgelbaum of the University of California, Los Angeles, Patrick Kennedy of the University of California, Berkeley, and Amit Khandelwal of Columbia University, put annual consumer and producer losses from the higher cost of imports at 68.8 billion dollars, or 0.37 percent of U.S. gross domestic product (GDP).
After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare effect is a 7.8-billion-dollar loss, or 0.04 percent of GDP, according to the research, which was last updated on Tuesday.
"U.S. tariffs favored sectors located in politically competitive counties," the paper read. "We compute that tradeable-sector workers in heavily Republican counties are the most negatively affected by the trade war," it added, suggesting that the White House actually inflicted pains mostly on farmers and blue-collar workers.
"It's pretty unclear that this trade war is a net win for the economy at this point," Weinstein of Columbia said in an interview with Bloomberg news, which in a report called the two papers "the most authoritative yet to document the negative effect" of the tariffs on the U.S. economy.
