Import tariffs reduce exports as well
As we discuss the impact of tariffs on business, the focus is unequivocally on importers and consumers who have to foot the bill and pay more for the same goods. But new research shows that the tariffs imposed in Trump’s first term in office also reduced US exports.
Look at the trend in US exports once corrected for seasonal effects and retaliatory tariffs shown below. The vertical red lines are the individual tariffs imposed by Donald Trump in 2018 and 2019:
A. Solar panels and washing machines (January 2018)
B. Metals (April-May 2018)
C. China Wave 1 (July 2018)
D. China Wave 2 (August 2018)
E. China Wave 3 with 10% tariffs (September 2018)
F. China Wave 3 with 25% tariffs (May 2019)
Deseasonalised US exports controlling for retaliatory tariffs 2015-2019
Source: Handley et al. (2025)
But why would US exports drop in response to import tariffs? US exports are integrated into a global supply chain and some of the inputs exporters need come from China and are subject to tariffs.
According to the research, this increased the costs for these exporters by about $900 per worker on average but $1,600 per worker in the manufacturing sector. US exporters tried to increase their prices to recoup these additional costs which made their products less competitive internationally and drove the decline in exports. The effect was larger for companies that were above the median in terms of inputs subject to tariffs.
Averaged out over all exporters, the 25% import tariffs on Chinese goods acted like a hypothetical 2% export tariff on US exporters.
High vs. low exposure products
Source: Handley et al. (2025)
"Controlled for retaliatory tariffs" is a key note on that chart, which means that the phenomenon described is: Place selected import tariffs on Chinese exporters to the US -> input costs for *all* US manufacturers go up -> those higher costs get tacked onto selling prices -> higher selling prices make US goods less competitive in export markets.
As I recall, those import tariffs weren't overly controversial as China has long been seen as acting in bad faith re: loss-leader pricing, dumping, and IP theft, so perhaps that 2% extra drag on exporters was seen as a necessary evil/insurance/buying time to hinder the Chinese from eventually putting them completely out of business.
It will be interesting to see how quickly and to what degree the current wave of tariffs against the US' (former) friends who were decades-long free-trade partners backfires spectacularly, especially as "shotgunning" blanket tariffs versus "rifle-shooting" selected tariffs is much more immediate and noticeable to the public.
Boycotts also appear to have very long behavioral tails. I know people of my mid-80s-age parents' who won't buy California lettuce and grapes https://en.wikipedia.org/wiki/Salad_Bowl_strike nor Nestle products https://en.wikipedia.org/wiki/1977_Nestlé_boycott decades later.
The CEO of Brown-Forman (maker of Jack Daniels and other deep Red State booze) is already singing the blues https://www.reuters.com/business/retail-consumer/brown-forman-misses-quarterly-sales-estimates-muted-spirits-demand-2025-03-05/ ; they already have the red stockprice chart to match https://www.google.com/finance/quote/BF.B:NYSE?window=5Y . Boo hoo hoo.
More Leopards Ate My Face Party action https://en.wiktionary.org/wiki/Leopards_Eating_People%27s_Faces_Party .
please clarify : china tariffs resulted in an average NET america export tariff of 2% ?
seems complementary to specific cases (e.g., steel vs cars) where tariffs in one sector were more than offset by damage in another sector, but this is the first i have seen on an overall effect of trump 1.0 (or any era).