Tariffs, Economic Growth and Income Distribution
Authors
Wu, Congsheng
Issue Date
2018-03-23
Type
Other
Language
en_US
Keywords
Tariffs , Trade war
Alternative Title
Abstract
The United States has a huge trade account deficit—$753 billion in 2016. President Trump has asserted that a more restrictive trade policy which involves tariffs and quotas would help to achieve his goal of boosting U.S. economic growth to 3-plus per cent. On March 1, 2018, Mr. Trump announced unexpectedly that the U.S. would impose tariffs of 25 percent on steel imports and 10 percent on aluminum. He later twitted that “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” The World Trade Organization (TWO) immediately issued a rare warning about Trump’s plan saying it risks a trade war. Do tariffs promote or hurt economic growth? This poster tries to shed some lights on this important question from both theoretical and empirical perspectives. If tariff-growth relationship is neutral or negative, then what are the consequences on income distribution—i.e., who are the winners and who are the losers?