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Why tariffs on imports have been bad for exports

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The negative consequences of tariffs include higher prices for consumers and businesses, retaliation by foreign governments, and a weakening of the global rules-based trading system that will surely harm U.S. interests greatly in the long run.

The U.S. Chamber of Commerce has been a consistent opponent of the recent proliferation of tariffs. In our view, tariffs are the wrong approach to resolving trade concerns, real or imagined: We even created a website dubbed www.thewrongapproach.com to detail their costs on a state-by-state basis.

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A popular T-shirt summarizes the harm inflicted by tariffs well, explaining that they “not only impose immense economic costs but also fail to achieve their primary policy aims and foster political dysfunction along the way.”

The negative consequences of tariffs include higher prices for consumers and businesses, retaliation by foreign governments, and a weakening of the global rules-based trading system that will surely harm U.S. interests greatly in the long run.

The U.S. Chamber of Commerce has been a consistent opponent of the recent proliferation of tariffs. In our view, tariffs are the wrong approach to resolving trade concerns, real or imagined: We even created a website dubbed www.thewrongapproach.com to detail their costs on a state-by-state basis.

A popular T-shirt summarizes the harm inflicted by tariffs well, explaining that they “not only impose immense economic costs but also fail to achieve their primary policy aims and foster political dysfunction along the way.”

tarrifs tshirt

But while tariffs are taxes levied on imports, the tariff war has also inflicted serious harm on U.S. exports.

It’s easy to see how exports contribute to the U.S. economy: 95% of the world’s consumers live outside the U.S., and selling them American-made goods and services supports growth and jobs here at home. Nearly half of U.S. manufacturing output is exported, and the proportion is similar for major agricultural commodities, such as wheat and soybeans. The U.S. also leads the world in services exports, which are growing 60% faster than goods trade.

Until recently, American exporters of goods and services had been accustomed to steady growth in their overseas sales. U.S. export growth averaged 6.5% over the 15-year-period of 1993-2007. After falling sharply in the great recession and then recovering, export growth had settled down to a rate of about 3% over the past decade.

However, since the tariff wars began in mid-2018, U.S. export growth has tanked, turning negative in the most recent quarterly data from the St. Louis Federal Reserve.

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