A new study asserts that the ongoing “tit-for-tat” international trade conflicts will cost at least 900,000 American jobs if they do not end soon.
At a press conference Wednesday where the study's findings were unveiled, Sen. Ron Johnson, R-Wis., spoke, urging President Donald Trump to end the tariffs he imposed against nearly every country the United States trades with. However, Johnson still supports Trump’s plan to initiate new trade policies that will help the U.S. make more money off of foreign trade and reduce theft of intellectual property occurring in other countries — namely China.
Johnson is also cosponsoring a bill with Sen. Pat Toomey, R-Pa., that will prevent current and future presidents from being able to unilaterally impose tariffs without Congressional approval, as Trump has, citing national security concerns.
Shared goal, different strategies
“We find that the minuses (of the tariffs) vastly outweigh the positives,” said Laura Baughman, a trade analyst who helped write the study, “Tariffs Hurt The Heartland,” published Wednesday by the pro-trade consulting firm Trade Partnership Worldwide.
Johnson agrees with Trump when it comes to the belief that trade between the United States and China unfairly favors the Chinese, and that change needs to be made to the countries’ trade policies. “We share that goal,” he said.
But the Wisconsin senator, an accountant by training and owner of an Oshkosh plastics manufacturing firm, has been saying for months that tariffs are causing more harm than good.
“Our concern really is what the strategy is to achieve that goal and, in particular, the harm being done along the way,” Johnson said.
Sen. Tom Carper, D-Del., added, “In my state especially, we’re seeing something that soybean farmers (and) chicken farmers don’t like. And they are collateral damage. It is not fair.
“We should not be treating our farmers that way,” Carper continued. “We’ve got to be tough with the Chinese … but we’ve also got to be smart that we don’t unintentionally hurt our own farmers.”
Gary Meier, president and part-owner of Metalworld, 1920 17th St., in Racine, said that international tariffs have forced his costs and prices to rise.
“When ‘The Donald’ announced the possibility of tariffs, prices went up … by almost 40 percent within several weeks. And that was before anyone even knew what the tariffs ended up being,” he said.
Metalworld is a metal fabricator that purchases steel in large sheets that it cuts to size and reshapes for vendors. When Meier sells his products to other companies, most of the cost is for his labor, although the rising costs of the raw materials still have an effect.
“Our customers just end up paying slightly more than they were before,” he said.
However, Meier added that the tariffs have benefited metal industries as a whole, something that is corroborated by “Tariffs Hurt The Heartland.”
“For one thing,” Meier said, “the raising of the price of steel has helped metal distributors and even the steel mills become profitable. The previous two or three years, the margins were pretty slim for those folks. And when everybody is a little more profitable, it stabilizes everything as for supply and demand.”
The steel tariffs are looming over Dave Daniels’ dairy farm in Kenosha County as well. He hasn’t needed to buy any new machinery recently. But if he does need to buy a tractor, for example, Daniels believes it will end up being more expensive because of the increased price of the metal.
Agricultural tariffs have affected Daniels’ profitability as well.
Last year, the selling price of Class III Milk — used for making cheese — was the lowest it’s been in four years, Daniels said, which he partially blames on Mexican tariffs.
The ‘new NAFTA’
Daniels, and other farmers across the United States, are still waiting for the tariffs imposed against Canada and Mexico to be removed, and for those two countries to remove their retaliatory tariffs.
“Mexico is one of our prime importers (of dairy products) from the United States,” he said. “It’s affecting our price.”
Daniels thinks that if Congress ratifies the USMCA (United States-Mexico-Canada Agreement) — which was signed by Trump and leaders from Canada and Mexico on Nov. 30 — then maybe his prices will finally go up again.
“What would be good for our farm … would be the USMCA be signed into law and passed by Congress so that hopefully the tariffs would be coming off so that we have freer trade,” he said. “… And hopefully the prices we see next summer and next fall will be better.”
Johnson agrees. He said that Trump should have already removed the tariffs on Mexico and Canada, if nothing else to improve relations between the three allies. With the USMCA affirmed and the tariffs gone, it would be easier to broker better deals with China, according to Johnson.
“If we go to China as a united world, we have a far better chance of making sure they abide by the rules and stop stealing our industrial secrets,” Johnson said.
During his State of the Union address Tuesday, Trump called NAFTA (which would be replaced by the USMCA) a “historic trade blunder” and “disaster.” But Democrats asked for changes to the new agreement, leading to the present standstill.
Politico reported Wednesday that “lawmakers on both sides have suggested there’s little hope for approving the new pact while Trump’s steel and aluminum tariffs on Canada and Mexico remain in place.”
Baughman said that economic gains have been made in some fields — such as in American steel, iron and manufacturing — but the losses incurred, particularly in agriculture, have made the gains no longer worth it.
This isn’t the first time Johnson has publicly condemned the tariffs and said they affect trade with nearly every U.S. trading partner. After a roundtable meeting with 15 Wisconsin businesspeople in July, Johnson issued a public letter that implored Trump to end the tariffs, citing anecdotes shared with him by his constituents.
Johnson said that he was told by Cindy Brown, owner of Chippewa Valley Bean Company, that “there has been no government action that has left us in such terrible shape as this has.”
In order to change the policies, Johnson asked business owners and workers to share their stories, which he said “can hopefully turn the tide and bring a little more rational approach. … It’s very important for the people being harmed by the tariffs and the retaliation to step to the plate and show that harm.”
Study: Lost jobs, dollars
“Tariffs Hurt The Heartland” found that, regardless of the effect on American producers, tariffs will always lead to higher prices for consumers, at least in the short term. This is because consumers will either have to pay more for foreign goods facing heavy taxes, or pay more for something that is American-made.
“The U.S. buyer must pay the tariffs,” the study claims. “If the U.S. buyer can shift to another foreign — or U.S. — producer, the cost of that alternative source of supply will be higher, as well, and shifting supply also costs time and money.”
Baughman said if the tariffs don’t end, they will reduce U.S. total gross domestic product in 2019 by 0.36 percent (or a loss of approximately $71 billion) and cost the average American family of four $767 extra this year.
They will also lead to a net loss of 943,700 American jobs, outweighing the estimated jobs created by an eight-to-one margin, Baughman estimated. Over 14,000 of those jobs lost will be in Wisconsin, she said.
Estimates of this magnitude aren’t unprecedented. In June, the Tax Foundation, an “independent tax policy nonprofit” based in D.C., estimated that the U.S.’s tariffs and the retaliatory tariffs would cause employment in the United States to decline by 459,816 total jobs, while also trimming nationwide wages by an average of 0.38 percent.
Update: This story originally said that Sen. Johnson backs the “Tariffs Hurt The Heartland” study. Johnson has not actually endorsed the study, but rather expressed concern at a press conference organized by the study's authors, regarding potential job losses that could caused by the president's imposed tariffs.