A new study by economists from the Federal Reserve Bank of New York, Princeton, and Columbia looks at the effects of the trade war. The paper notes that the tariffs imposed by the U.S. last year and the retaliatory tariffs imposed on U.S. exports represent the “first episode of large-scale competitive tariff protection since the Great Depression of the 1930s.”

The study finds:

• U.S. tariffs were “almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers.”
• The real income reduction from U.S. tariffs was about $6.9 billion through November 2018.
• An additional $12.3 billion was transferred from U.S. consumers and importers to the government in tariff revenue.
• $136 billion of imports and $29 billion of exports was “lost or redirected in order to avoid the tariffs.”
• After the tariffs were imposed, import values dropped 25 to 30 percent. “This drop is particularly striking given that the imports of unaffected sectors and countries rose by about 10 percent over the same period.”
• Retaliatory tariffs imposed by other countries are borne by their consumers and importers. “However, this does not mean that U.S. exporters are not being affected by the retaliatory tariffs. . . . a ten percent foreign tariff is associated with a 32 percent decline in the value of U.S. exports. In other words, by the end of 2018 foreign retaliatory tariffs were also costing U.S. exporters approximately $2.4 billion per month in lost exports.”

Bloomberg reports today that the president “is pressuring U.S. trade negotiators to cut a deal with China soon in hope of fueling a market rally.”