Estimated Impacts of US Sections 232 and 301 Trade Actions on the US and Global Economies: A Supply Chain Prospective 2018-2030
By Terrie Walmsley and Peter Minor
Publishing Year: 2018
In this report, the impacts of current and proposed US trade actions under Section 232 and 301 of US trade law, along with current and potential responses of US trading partners are estimated.* Together, current, proposed, and potential trade actions by the US and its trading partners could impact over $1.0 trillion of US imports and exports. Our analysis finds that if all trade actions are implemented, the cumulative impacts on the US would include:
- Gross domestic product (GDP) would be reduced by a projected -1.78 percent in 2019 (or $365.1 billion in 2017 dollars) with a long run reduction of -1.25 percent in 2030 (or $331.8 billion in 2017 dollars).
- GDP losses are projected to cumulate to a discounted value of $2.8 trillion between 2018 and 2030.
- All countries, except the US and China, gain from US trade actions and responses and increase GDP.
- In 2019, households suffer losses equivalent to $2,357 per household (or $915 per person) in 2017 dollars.
- High economic growth in the US will initially protect workers from unemployment, however as more trade actions are initiated, and partners respond, increased unemployment could ensue.
- In 2019, we find that 2.75 million workers are likely to become unemployed if all trade actions are implemented concurrently. With the implementation of each additional trade action, underlying wage growth in the economy is diminished, increasing the probability that workers will become unemployed. With such large negative impacts from the combined trade actions, it will be difficult for the US to maintain wage growth and full employment.
- A high proportion of these job losses affect agricultural and low-skilled workers (e.g., workers in manufacturing where activity will slow due to higher costs for intermediate inputs into the supply chain caused by US trade actions and its partners’ responses).
- In addition to those unemployed, we also project a further 665,000 workers will be displaced in 2019 and must find employment in new industries. By 2030, 1.07 million workers will be employed in a different sector, but for the trade actions.
*In 2018, the United States (US) Administration initiated several trade actions, including aluminum and steel tariffs under Section 232 of the Trade Expansion Act of 1962 and tariffs on China based on Section 301 of the Trade Act of 1974. The US Department of Commerce (DOC) has initiated a Section 232 investigation into US imports of automobiles and parts.