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Additional tariffs on US imports affect inputs

Additional tariffs on imports from the United States affect the supply of inputs and have other negative effects, according to a couple of investigations.

Since tariffs act as a tax on foreign-produced goods, they distort price signals, which can lead to less efficient consumption and production patterns, which can ultimately lower growth rates, an analysis concludes. of the US Congress.

As of January 23, 2020, the United States collected $ 54 billion from additional taxes paid by U.S. importers, according to U.S. Customs and Border Protection.

These taxes have had a negative aggregate effect on the US manufacturing sector with higher input costs that offset the gains from greater protection, according to a preliminary analysis by researchers from the Federal Reserve Board (Fed).

Also, higher tariffs create greater economic uncertainty, which can hold back business investment and create a greater drag on growth.

For example, the same analysis adds, preliminary research suggests that increased trade policy uncertainty may have reduced US aggregate investment by 1% or more in 2018.

Tariffs

Most studies, however, predict declines in GDP growth: the US Congressional Budget Office estimated that the tariffs currently in place would reduce US GDP by 0.5% in 2020, below a baseline without tariffs, while increasing consumer prices by 0.5%, thus reducing real household income by $ 1,277.

From a global perspective, the IMF estimated that import taxes would reduce global GDP in 2020 by 0.8 percent.

 

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