I’m discussing the effects of tariffs and quotas (general, anti-dumping, countervailing, Section 232) and have updated some graphs on steel employment, production, and prices. Here’s a particularly interesting one:
figure 1: Steel PPI (blue) and steel import prices (brown), both logarithmic 2018M03=0. Recession dates as defined by NBER are shaded in gray. Orange indicates Section 232 tariffs are imposed. Source: BLS calculations by FRED, NBER and authors.
Obviously, the weights and definitions of the two indices are different, so the two series are not strictly comparable. However, where the import price index does not include tariffs, the evolution of the gap between the two series indicates the impact of tariffs. This suggests that removing the Section 232 tariffs will reduce inflationary pressures in one go.
AAF estimate The consumer cost of Section 301 and Section 232 tariffs is approximately $51 billion (loss of consumer surplus is not the same as loss of net welfare).
Removing steel and aluminum tariffs could lead to a one-time drop of 1 percentage point in PPI, while removing China tariffs would result in a one-time drop of about 25 percentage points in CPI. Russ/PIIE.
