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Do tariffs help or hurt an economy?

Published 13 February 2024

A new study finds that Trump’s tariffs have not helped US employment or economic prospects, but have helped Trump politically. What do US-China tensions mean for countries caught in the middle? Plus, other developments on key WTO issues and critical mineral prices. Explore our reading list for more.

The costs and gains of tariffs

David Autor, Anne Beck, David Dorn, and Gordon H. Hanson query whether tariffs help the heartland, for the National Bureau of Economic Research. The New York Times interprets the report and the costs and gains it created. In the Wall Street Journal, Greg Ip explores what might happen if Trump imposes 60% tariffs on Chinese imports. The US goods trade deficit with China hit its lowest level since 2010, writes Bloomberg.

Mentioned publications

  1. Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States - David Autor, Anne Beck, David Dorn and Gordon H. Hanson, National Bureau of Economic Research, January 2024
    A new paper studying the impact of Trump’s tariffs finds no economic help but increased political support for Trump.
  2. Trump’s Tariffs Hurt U.S. Jobs but Swayed American Voters, Study Says – Ana Swanson, The New York Times, February 2, 2024
    Trump’s tariffs imposed costs without raising employment in the short term, but won political favor.
  3. A China-U.S. Decoupling? You Ain’t Seen Nothing Yet – Greg Ip, The Wall Street Journal, February 7, 2024
    Will 60% tariffs on all imports achieve US-China decoupling?
  4. Trump’s Favorite Metric Has Biden Winning the US-China Trade WarBloomberg, February 6, 2024
    The US deficit in goods trade with China in 2023 hit its lowest annual level since 2010.

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De-risking supply chains

Richard Baldwin, Rebecca Freeman, and Angelos Theodorakopoulos examine the hidden exposure of US supply chains to China for the National Bureau of Economic Research. Yeo Han-koo asks if South Korea is de-risking from China for the Peterson Institute for International Economics. Keun Lee considers the place of South Korea in the US-China rivalry in the Wire China. The US imported more from Mexico than China last year, reports the New York Times.

Mentioned publications

  1. Hidden Exposure: Measuring US Supply Chain Reliance - Richard Baldwin, Rebecca Freeman, and Angelos Theodorakopoulos, National Bureau of Economic Research, October 2023
    Policies to address supply chain disruptions should focus on individual products, not all of manufacturing.
  2. Is South Korea de-risking? – Yeo Han-koo, Peterson Institute for International Economics, January 26, 2024
    In 2023, Korean exports to China declined while exports to the US increased.
  3. South Korea and the U.S.-China Rivalry – Keun Lee Op-Ed, The Wire China, January 7, 2024
    What do US-China tensions mean for South Korea and other countries caught in the middle?
  4. For First Time in Two Decades, U.S. Buys More From Mexico Than China – Ana Swanson and Simon Romero, The New York Times, February 7, 2024
    Mexico officially is the largest exporter to the US for the first time in 20 years, surpassing China.

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Key issues for the World Trade Organization

Malena Dailey and Ed Gresser of the Progressive Policy Institute quantify and qualify the importance of the WTO e-commerce tariff moratorium at 25, while Inu Manak and Manjari Chatterjee Miller of the Council on Foreign Relations argue for responsible consensus on plurilateral arrangements at the WTO.

Mentioned publications

  1. WTO E-Commerce Tariff Moratorium at 25 – Malena Dailey and Ed Gresser, Progressive Policy Institute, January 2024
    Members should continue their current practice of not imposing customs duties on electronic transmission.
  2. Responsible Consensus at the WTO Can Save the Global Trading System – Inu Manak and Manjari Chatterjee Miller, Council on Foreign Relations, January 22, 2024
    The US should do more to convince India to support plurilateral negotiations at the WTO.

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Lower prices for critical minerals

A glut of battery minerals will deepen China’s dominance, writes Eliot Chen in the Wire China. Nickel and lithium prices are plunging, per Nikkei Asia.

Mentioned publications

  1. How a Battery Metals Supply Glut is Deepening China’s Dominance – Eliot Chen, The Wire China, February 4, 2024
    Cheap, Chinese-produced minerals undermine Western efforts to develop alternative critical mineral supply chains.
  2. Nickel and lithium prices plunge as Chinese EV demand loses steamNikkei Asia, February 6, 2024
    The slowing pace of EV production and the drop in construction in China are driving down prices.

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