The Coalition for a Prosperous America (CPA) today released a statement regarding a report by the U.S. International Trade Commission (USITC) analyzing the effects of Section 232 and Section 301 tariffs on more than $300 billion of U.S. imports. The USITC report found that the tariffs reduced imports from China, effectively stimulated more U.S. production of the tariffed goods, with very minor effects on prices. As a result, the US is better positioned to avoid future supply chain inflation and shocks than before the tariffs.
The USITC investigation found that:
- Across all affected sectors, Section 301 tariffs lowered Chinese imports by 13%, increased U.S. production by 0.4% and increased prices of U.S. products by just 0.2%.
- The section 232 tariffs cut imports of affected steel products by 24%, increased U.S. prices by 2.4%, and increased American production by 1.9%.
- Aluminum imports fell 31% due to Section 232 tariffs, while prices in the U.S. rose 1.6% and U.S. production increased 3.6%.
In additional comments at the end of the report, USITC Commissioner Jason Kearns commented that the report focuses on short-term economic outcomes, but does not address the broader issue of China’s flouting of the rules of international trade. The report, Kearns wrote, “describes the price increases that result from the tariffs; it does not describe how the extraordinarily low “China price” is based on massive Chinese government subsidies and other trade-distorting policies, exploitative labor practices, and environmental degradation that “have helped keep the ordinary forces of a market economy at bay.” Nor does it describe how those artificially depressed prices contributed to the “China trade shock” in the United States that forced many U.S. businesses to close their doors and move their factories to China and other low-cost countries to survive, resulting in the loss of millions of American jobs with a range of dire economic and social consequences.”
“The USITC report proves what we have been saying at CPA for more than a decade: tariffs are a critical reshoring tool to stimulate domestic production, avoid future inflation and to reduce dependence on foreign supply chains,” said Michael Stumo, CEO of CPA. “The USITC’s finding that the China tariffs increased domestic production with little effect on prices dispels the myths from multinational importers and their lobbyists that American consumers pay for the China tariffs.”
“This valuable new USITC report shows that when imposed on the right products in the right industries, tariffs can stimulate domestic production, leading to more well-paid middle class jobs, less dependence on unreliable foreign sources, with only a minimal impact on prices,” said CPA chief economist Jeff Ferry. “The finding that domestic steel and aluminum prices rose by 0.7% and 0.9% due to tariffs shows that where you have domestic competition, even from only a handful of firms, tariffs will have a tiny effect on prices. Compare that with the jump in used car prices of 40% in 2021 due to our excessive dependence on semiconductors from Asia, and it’s clear that those economists who moan about tariffs and prices need to pull their heads out of the sand and look at real-world prices instead of their silly models.”