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A little more than a year after President Donald Trump slapped a 20 percent tariff on imported washing machines, new research finds that American shoppers have been the ones to pay the price.

A study conducted by two researchers at the University of Chicago and a Federal Reserve Board Governor found that washers cost an average of 12 percent more after the imposition of the tariffs, or roughly $86 to $92 more per appliance.

“It’s a good example of how the benefits of free trade are extremely diffuse but then the benefits of protectionism are concentrated,” said David Dollar, a senior fellow at the Brookings Institution.

Collectively, Americans are paying more than $1.5 billion extra every year from this tariff alone. Another recent study by a trio of economists from Princeton and Columbia universities and the New York Fed found that the combined impact of all the Trump administration’s trade sanctions costs Americans $1.4 billion each month.

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The researchers found that the price of clothes dryers rose in tandem with washing machine price increases, even though dryers weren’t impacted by the tariffs. The study also found that domestically manufacturers raised prices on their washing machines, as well. All the big brands studied raised their prices by a range of 5 percent to as much as 17 percent.

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Despite the president’s contention that the import tariffs on washing machines would create more American jobs, the new study found that the number of jobs created was very small, only around 1,800, but at a cost of $815,000 per job. And although Trump has said that the revenues are collected by the U.S. government from import tariffs, the researchers also found that this is not the case. The tariffs on imported washing machines and machine parts brought in a mere $82 million over the course of a year.

Tariffs can give a boost to the profits of domestic producers, but Dollar said ordinary workers rarely see those gains. “In most companies, it’s primarily benefiting the shareholders. The actual employment generation is usually very small. Firms expect these to be temporary, so they raise prices but they don’t employ more people,” he said. “It’s not an efficient way to create employment.”

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Several weeks ago, John Boyd’s combine broke down. The machine is an absolute necessity for Boyd—he, like most commodity farmers, uses it to harvest the soybeans, corn, and wheat he grows every year in Baskerville, Virginia. What he really needs is a whole new combine, which would allow him to harvest his crops more efficiently, and which would last him much longer than fixing his current machine or buying a used one. But a new combine would cost him more than $480,000. With his farm income down and equipment prices up, “I haven’t been able to buy anything at all,” Boyd says.

Like farmers around the country, Boyd is in the crosshairs of the trade war, caught between the 25 percent tariffs that the United States has imposed on imported raw materials such as steel and aluminum and the retaliatory tariffs that China and other countries have imposed on major American agricultural exports, especially soybeans. Though the United States and China have been trying to negotiate a new trade deal, a resolution isn’t likely to come until at least April.

The trade war almost couldn’t have come at a worse time for the agricultural industry: Farm debt is on the rise, farm income is in a three-year trough, and the American Farm Bureau Federation’s chief economist said last month that many farmers are dependent on off-farm income to keep their operations running. But farmers can’t push pause on their crops to try to wait out the trade war—they’re at the beck and call of the planting and harvesting seasons.
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“Everything’s going up in price, but also the cost of labor is going up,” says Taylor Brooks, a salesperson at Boyd’s local equipment dealer, James River Equipment in Tappahannock. For now, Boyd, the founder and president of the National Black Farmers Association, has decided to spend about $2,600 on parts and fix the combine himself. If he were to pay someone else to do it, he estimates that it would cost him about $8,000.

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Mark Watney, the president of the North Dakota Farmers Union, told me that at a mid-winter convening of farmers from every county in North Dakota, he heard “just about every farmer in the room” say that they had experienced price hikes of 5 to 10 percent on most farm equipment from their local suppliers. For some large pieces of equipment, such as hopper grain bins, which run about $12,000 a piece, they were told that costs had risen at least 20 percent. Those numbers track with what the owner of a farm-equipment store in Union, Maine, told The Washington Post in September: He’d seen inventory prices go up 20 to 25 percent, an increase he believed was driven primarily by the steel tariffs. Many equipment dealers are simply passing the price of the tariffs on to consumers, farmers who are already in an economic crunch.

The higher equipment costs brought by tariffs are just one part of a global economy that’s not particularly friendly to American agriculture these days. Farmers are being squeezed from all sides: by retaliatory tariffs, by equipment prices, by a stubbornly low agricultural market. Some are still waiting on the Trump administration’s trade aid to come through, though the markets were bad even before the trade war. Although U.S. Department of Agriculture officials were cautiously optimistic at the agency’s Agricultural Outlook Forum last month, they also said that United States soybean exports are down $2 billion because of the trade war, and that the United States risks being “crowded out” of export markets for the foreseeable future.

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Economic Illiteracy

Dear president Trump. You are an economic illiterate. I suggest some light reading.

Reading List

Economics for Real People by Gene Callahan
Economics in One Lesson by Henry Hazlitt
What Has Government Done With Our Money? by Murray N. Rothbard
Case Against the Fed: Murray N. Rothbard
Tomorrow’s Gold Marc Faber
Capitalism For Kids: Growing Up To Be Your Own Boss by Carl Hess
Debunking Modern Monetary Theory (MMT) & Understanding it First by Erik Zimerman
An Introduction to Austrian Economics by Thomas C. Taylor

Items two, three, four, and eight are free downloads at mises.org. Item seven is a free website article.

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Originally posted by Piano*Dad:
Textbook stuff that every undergraduate economics major learns. Alas.

Diffuse costs of protection aggregating up to a large amount. Smaller but concentrated benefits going to certain firms. Any measure of cost per job saved yielding head-shaking amounts.

I think US News should reduce U-Penn's ranking by about 20 places because Trump has their degree.

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During his most recent State of the Union address, Trump alluded to rhetoric by Democrats and said, “Here, in the United States, we are alarmed by new calls to adopt socialism in our country.” At a rally in Wisconsin last month, Trump vowed that America “will never be a socialist country.” He framed the crisis in Venezuela as a failure of socialism and suggested Democrats wanted to use the Mueller investigation to force him out of office and “institute Socialism.”

Life, however, comes at you fast — especially when you launch a trade war with a country that represents the second-largest export market for American agriculture.

During an Oval Office event with Hungary’s far-right leader Viktor Orbán on Monday, Trump outlined a plan to redistribute money from American importers to farmers hurt by his escalating trade war with China that might fall short of socialism, but is certainly a far cry from the values of free markets and free trade traditionally embraced by Republicans.

“Out of the billions of dollars that we’re taking in [from tariffs], a small portion of that will be going to our farmers,” Trump said. “We’re going to take the highest year — the biggest purchase that China has ever made with our farmers, which is about $15 billion — and do something reciprocal to our farmers.”

Because he doesn’t understand how tariffs actually work, Trump seems to believe this plan represents a redistribution from China to American farmers. But China does not in fact pay for the 25 percent on $200 billion of Chinese goods in tariffs Trump reimposed on Chinese goods after months of negotiations failed to bring the two countries into agreement. Those tariffs are paid by American importers, who often pass the cost along to consumers.

So Trump’s plan, as vague as it is, seems to represent a selective protection from the costs of tariffs: All Americans — from those who pay for his tariffs in the checkout line to farmers hurt by the retaliatory tariffs China has placed on their goods — are being asked to absorb some short-term pain for the good of the country. But the federal government is subsidizing that cost for only a select group.

On Tuesday morning, Trump reiterated his plan on Twitter, and referred to farmers are “Our great Patriot Farmers” — a label acknowledging the hardship the trade war is causing.

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Kohl’s, J.C. Penney and Home Depot executives were united in their messaging against additional taxes on imports from China, as they spoke with analysts during post-earnings conference calls Tuesday.

Kohl’s, which saw its stock dive to a 52-week low after cutting its earnings estimates, blamed part of the reason for its lower forecast on a hit from tariffs.

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Also this week, more than 170 shoe retailers, including Nike and Under Armour, sent a letter to President Donald Trump, saying 25% tariffs could lead to certain families paying a nearly 100% duty on shoes.

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Originally posted by wtg:

Also this week, more than 170 shoe retailers, including Nike and Under Armour, sent a letter to President Donald Trump, saying 25% tariffs could lead to certain families paying a nearly 100% duty on shoes.

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“Right now these tariffs primarily affect our China-sourced merchandise in our home and accessories business,” CFO Bruce Besanko told analysts on a post-earnings call. “China is not our largest source of merchandise but it is a big one. It’s a little over 20% of our goods.”

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Originally posted by Steve Miller:

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Originally posted by wtg:

Also this week, more than 170 shoe retailers, including Nike and Under Armour, sent a letter to President Donald Trump, saying 25% tariffs could lead to certain families paying a nearly 100% duty on shoes.

Families? Which families are these?

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The FDRA estimates Trump’s proposed tariffs on China will add $7 billion in extra costs for consumers, on top of the billions Americans pay due to the tariff on footwear imports that was enacted in 1930. Those extra duties fall hard on working class Americans and families, it said.

“Adding a 25 percent tax increase on top of these tariffs would mean some working American families could pay a nearly 100% duty on their shoes. This is unfathomable,” the companies said, adding that “it is time to bring this trade war to an end.”

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Originally posted by Steve Miller:

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“Right now these tariffs primarily affect our China-sourced merchandise in our home and accessories business,” CFO Bruce Besanko told analysts on a post-earnings call. “China is not our largest source of merchandise but it is a big one. It’s a little over 20% of our goods.”

I find that hard to believe. Where does the other 80% come from?