In recent weeks, about 1,500 comments were filed with the United States Trade Representative (USTR) concerning the tariffs imposed by the Trump administration—and maintained by the Biden administration—on imports from China as a result of the recent trade war. The majority of the comments paint a bleak picture: the tariffs have—contrary to unsupported assertions you may have read elsewhere—caused very real pain for domestic firms, their workers, and the U.S. economy. These facts, coupled with the fact that the tariffs have not forced Beijing to change its troublesome economic policies and the recent bout of historically high inflation, are a stark reminder that the US should dramatically reduce the number of products subject to the tariffs, if not eliminate them entirely.

To recap, in 2017, President Trump directed his USTR to investigate Chinese commercial practices pursuant to Section 301 of the Trade Act of 1974. In March 2018, USTR issued a report with its findings that China uses a number of unfair and malicious methods, ranging from state-directed cyber hacking to forced technology transfers, to acquire U.S. technology in service of Beijing’s high tech industrial policy known as “Made in China 2025”. The Trump administration used the report to levy a series of ill-advised tariffs on about 70 percent of imports from China at an average rate of about 20 percent, about six times higher than they were up until then. The tariffs triggered predictable retaliation by the Chinese government and utterly failed to change Beijing’s practices, while instead increasing prices for imported goods for American firms and families.

The costs of the tariffs have been estimated in several academic studies that are summarized below, in a table from a forthcoming Cato Policy Analysis on the costs of these duties. In spite of these costs (which are not “barely noticeable”, as some supporters of the tariffs have claimed), the Biden administration has shown little appetite to turn the page on the previous administration’s grievous trade war.

While these and other studies are useful, they are admittedly static estimates (and nationally-aggregated ones at that). The comments to USTR, on the other hand, put a human face on the statistics—and thus show that tariffs impose very real harms on real people across the country.

Higher Costs for American Companies—and Consumers:

Most obviously, firms are paying the additional duties on their imports. For some, tariffs have increased other operating costs.

  • Worldwide Material Handling, based in Romeoville, IL, employs 41 people. The company produces storage and warehouse equipment. According to their submission, the tariffs increased prices “and also put a significant pressure against bank loans and credit lines.” The company has had to absorb some of these costs and reduce their branch locations and rented warehouse, and freeze hiring for additional staff.

In the end, consumers pay for at least some of this additional cost burden.

  • Newport Metals LLC, located in Jersey City, NJ, produces magnesium anodes (among other metal goods). In their submission, they wrote that they “and their downstream distributors all add the 25% [tariff] plus their financing cost and profit so that the end users pay an extra 35–40%.”
  • Sheet Metal Workers Local 63 and IBEW Local 7 are labor unions representing 240 workers at CRRC MA, a Massachusetts-based subsidiary of a Chinese railcar manufacturer. In their submission, they indicate that tariffs on inputs for rail manufacturing could make such transit projects more expensive for American taxpayers: “The only purpose that these tariffs serve is to raise the cost of transit projects, raise fares on systems such as MBTA, SEPTA and LA METRO […] the cost of the tariffs will be approximately $41 million spread out across all contracts.”

Consumers also pay through longer wait times, as some companies are keeping less inventory to avoid paying the tariffs.

Less Investment in Workers and Capital:

These costs generate additional economic losses:

  • Monahan Partners, located in Arcola, IL, employs 10 workers and supplies equipment for cleaning and food services. In their submission, they report having “experienced a 9% reduction in head count and [being] forced to have a pay freeze” due to the burden of the tariffs.
  • Champion MotorSports is based in Roswell, NM. Employing 25 people, they sell motor vehicles, including motorcycles and ATVs, and parts. In their submission, they claim that the Section 301 tariff regime has “had a chilling effect on any increased capital investment in any domestic manufacturing endeavor [from their suppliers] over the past four years.”

These losses have been compounded by the bad timing of the tariffs—coinciding with the onset of both the COVID-19 pandemic and decades-high inflation.

Onshoring Is Not Proving to Be Cost-Effective:

Whereas the tariffs might have been intended to bring back some manufacturing to the United States, the submissions to USTR suggest that some companies are finding little relief from these higher costs at home:

  • Worksman Cycles is a more than 90-year old producer of industrial, recreational, and specialty bicycles. Based in Ozone Park, NY, they submitted that “as soon as the tariff was announced [their] next orders from domestic sources for low carbon steel tubing raised their prices over 30% and stainless-steel sheet went up 68% in 2020 and […] 200% higher in 2021/2”. (Meanwhile, some U.S. steel producers praised the tariffs in comments submitted to USTR.)
  • HUSCO International produces hydraulic valves and employs 1,000 workers in facilities in Wisconsin, Iowa, and Michigan. Their submission explained that they “have approached several prospective domestic U.S. suppliers and none of these U.S. suppliers are willing to invest in the […] capital necessary to produce these types of parts at industry price points.”
  • Golden Brothers, Inc. employs almost 400 people and is based in Old Forge, PA. Its products include power lift chairs for elderly and disabled people. The company’s submission shared that they contacted potential U.S. suppliers of relevant parts after the imposition of the tariffs, but “the domestic quotes were typically 200 to 300 percent higher than the Chinese prices”.

Interestingly, other misguided U.S. trade policies may be compounding the costs of re-shoring:

  • Newport Metal’s submission also noted that “the U.S. has a +100% antidumping duty on the form of magnesium that would be used, so it is uneconomical to make magnesium anodes in the U.S.”

Some Supply Chains Are Staying in China:

Given these high costs, and as some goods sourced from China (particularly for technology end-products) are highly specialized, some companies are keeping their supply chains in China while others are finding alternative suppliers in other foreign countries. Or, they are doing both:

  • Microlife Corporation USA is a 27-employee producer of diagnostic equipment like blood pressure monitors and pulse oximeters, located in Clearwater, FL. Their submission stated that “the Section 301 tariffs do little to shift supply chain concentration within the medical device sector away from China. A company that sells end-products like Microlife may move locations for manufacturing of the end-product, but the suppliers responsible for producing the product inputs are not exposed to the tariffs and will remain in China.”

(Again, these comments are just the tip of the iceberg—there are 1,497 of them in total.)

The simple truth is that a lot of two-way trade between the United States and China is completely unobjectionable. Sabine Weyand, the European Union’s Director-General for Trade, recently noted in an essay for Internationale Politik Quarterly that 94 percent of EU trade with China is “unproblematic” and that only about six percent is the result of a one-sided dependency for EU member nations. As these filings with USTR demonstrate, tariffs have hurt a number of producers in sectors that are in no way “strategic” or sit at the nexus of national security and technology, which is where policymakers should be focused.

Policymakers in Washington—and in the capitals of other market-oriented democracies—have very legitimate concerns about Beijing’s economic practices. Yet the status quo—tariffs, subsidies to favored industries and tight export controls—has failed to discipline those practices and instead has imposed enormous pain onto a number of industries and the American economy at large. It’s time for a new approach—and well past time to drop the tariffs.