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Study finds Trump's China tariff would create 1.36 million jobs

President Donald J. Trump addresses the media Saturday, June 9, 2018, at the G7 in Charlevoix, Canada. (Official White House Photo by Shealah Craighead)

The establishment media reporting President Trump’s economic battle with China is warning of massive new costs for American consumers.

Tariffs, after all, are paid by American consumers who buy Chinese products, reporters have needled White House officials into confirming.

But one columnist, admitting he is “no fan of the president,” has had enough of the “partisan, inaccurate drivel.”

Marketwatch columnist Brett Arends writes: “Yes, tariffs are ‘costs. But they do not somehow destroy our money. They do not take our hard-earned dollars and burn them in a big pile. Tariffs are simply federal taxes. That’s it. The extra costs paid by importers, and consumers, goes to Uncle Sam, to distribute as he sees fit, including, for example, on Obamacare subsidies.”

He went on: “It wasn’t long ago the media [were] complaining because Trump was cutting taxes. Now it’s complaining he’s raising them. Confused? Me too. And the amounts involved are trivial. Chicken feed.”

But now there’s even more ammunition for those who support Trump’s insistence on a fair trade relationship between the U.S. and China.

A study by the Coalition for a Prosperous America found that a potential 25 percent across-the-board tariff on all imports from China would deliver “significant, sustained benefits for the U.S. economy.”

It would create 1.36 million additional jobs and an additional $232 billion to GDP over five years, the study concluded.

“China’s rise has come at the expense of U.S. jobs and manufacturing,” said CPA Chairman Dan DiMicco. “This new research demonstrates just how much the United States stands to gain from reclaiming our manufacturing base. Blind adherence to free trade clearly hasn’t worked, and boosting domestic production should now be our top priority.”

The organization’s chief economist, Jeff Ferry, and senior economist, Steven Byers, built a “detailed model of U.S. trade with China to examine the effects of the imposition of a permanent, across-the-board 25 percent tariff on U.S. imports from China,” CPA said.

“The model showed that a 25 percent tariff boosted annual growth in U.S. gross domestic product each year in the five-year projection, contributing 0.2 percent of additional GDP growth in 2023 and 2024. Overall, this ‘permanent across-the-board 25 percent tariff’ (PATB-25) would add $232 billion to total GDP by 2024, equivalent to a $700 bonus for every American.”

As a result of such a tariff, some production would be moved back from China to the United States or to lower-cost third countries.

“Overall, this would stimulate both U.S. consumption and production, adding 365,000 manufacturing jobs. By 2024, $69 billion worth of annual production would have migrated from China to the United States,” the organization said.

“Our model demonstrates that across-the-board U.S. tariffs on Chinese imports stimulate the U.S. economy, increase U.S. production and jobs, and lead to a reduction in U.S. import costs over time,” Ferry explained.

“The model provides additional evidence that decoupling the U.S. economy from China and its predatory trade and subsidy practices will make the U.S. economy stronger, with more production, investment, and jobs.”

The research suggested inflation rising “only marginally, and never by more than two-tenths of a percentage point.”

That’s because while Chinese imports would be more expensive, there would be much less of it because production would move to the U.S. or other countries.

The study concludes there’s bad news for China.

“Model results indicate that $3.23 billion of production will leave China in the first year, and by 2024, $297.4 billion will have left. To the extent production migrates from China to lower-cost countries, U.S. import prices will trend lower. In total, these factors lower the average trade-weighted cost of imports by 4.6 percent after five years. This decrease in the cost of imports stimulates growth in the domestic economy,” the study said.

It noted that while some production costs are higher in the U.S. than in China, there are other factors.

“Locating production in the U.S. offers … lower transportation costs, more logistical flexibility, and closer connectedness to consumer markets, distributors, and senior management.”

And there’s a side benefit: “The boost to U.S. national security is significant, though outside the scope of this purely economic model. Decoupling from China reduces our dependence on an unfriendly nation which is a military, industrial, and geopolitical rival.”

MarketWatch’s Arends said the “hysteria” over the tariffs Trump is using to press China to level the international field of trade is motivated by “a political agenda.”

He argues the financial cost “is peanuts” and charged that most of what media reports include is “misleading or a downright lie.”

Arends wrote that if Trump slapped 25 percent taxes on all Chinese imports, it would amount to only $135 billion, a tiny part of the GDP of $20.5 trillion.

“The tariffs are simply a means to an end. The president is trying to get China to start buying more of our stuff. He knows the so-called Middle Kingdom, which now has the second-biggest economy in the world, responds to incentives more than to nice words. These tariffs give China an incentive to open up.”

China’s “retaliation?”

“Just posturing,” he said.