Last week, more than 1,000 economists, including 15 Nobel laureates and a bipartisan group of former White House economic advisers, sent a letter to the Trump Administration warning them against the protectionist policies that have been considered, including the steel and aluminum tariffs announced in March. A group of economists gathered at that National Press Club to announce the letter and urge President Trump to reconsider his course of action.
“I signed this letter because I know that tariffs won’t help - the steel industry in particular,” said Susan A. Aaronson, research professor of international affairs at George Washington University. “There has never been a sector where protectionism actually helps the industry and the workers. It always hurts consumers and taxpayers.”
The letter from these preeminent economists comes as President Trump is meeting with representatives from China to discuss trade policy. President Trump campaigned on being a tough negotiator on trade, but the tariffs that have been put forward by his Administration are not about a negotiation - they’re about starting a trade war.
“The U.S. role in the global economy has changed… the U.S. no longer dominates the world trading system, by any stretch,” said Sherman Robinson, Senior Fellow at the Peterson Institute for International Economics. “If the U.S. initiates a trade war, the rest of the world can just adjust around the U.S.”
“A trade war has no winners, and should never be fought,” Robinson said.
What has thrown uncertainty into the mix is that the Trump Administration has granted temporary exemptions to certain countries - with no indication of how long those temporary exemptions may be extended, or if other countries could be eligible with them as well. Uncertainty like this is only going to make trade policy worse.
“Rigorous studies of past tariffs show that the number of workers displaced by higher tariffs far outnumber the number of workers who gain. Just as in the days of Smoot and Hawley, higher U.S. tariffs will be met by higher tariffs from our trading partners,” said Mary Lovely, professor of economics at Syracuse University’s Maxwell School of Business. “No one wins a trade war… jobs are tied to our trade flows, imports as well as exports. Tariffs put all those jobs in jeopardy.”
“A strong, confident U.S. gains by open trade, not by hiding behind protectionist walls,” Lovely concluded.
Robert Dietz, chief economist of the National Association of Home Builders, gave a specific example of the impact of tariffs on American families. “The result of lumber tariffs is that now the average single-family home is $6,000 more expensive to build, and the average apartment is about $2,000 dollars more expensive to build.
Douglas Holtz-Eakin, president of the American Action Forum, added, “as we impose protection today we are looking backwards. The lesson is to always look forward, and to make sure in going forward that you can compete. The lesson is not to protect. The lesson is to make sure you can compete, and invest in the capacity to compete. Those lessons are just as important today as they were 88 years ago, and they must be laid clearly to the American people who have a great stake in this. It’s about the people, and the innocent people that will be hurt.