This Working Paper presents the results of a CPA econometric model showing that a permanent tariff on Chinese imports would stimulate the US economy.
by Jeff Ferry (Chief Economist) and Steven Byers (Senior Economist)
The Coalition for a Prosperous America (CPA) has updated a prior study on the impact of permanent tariffs on all Chinese imports. Specifically, we introduce the effects of Chinese retaliation with tariffs on US exports to China; we add the effects of the US Department of Agriculture’s (USDA) programs to support farmers and food processors negatively affected by Chinese retaliation; and, we add the impact of the US government spending the revenue generated by the China tariffs. We find that Chinese retaliation reduces the benefit to the US economy by 14 percent, but the net benefit remains large. The USDA programs provide relief to the agricultural industry and restore the net benefit to almost the same level as before the retaliation. Finally, we look at the impact of the government reinvesting the tariff revenue in the US economy by boosting government spending. The tariff revenue totals $547 billion over five years. If those funds are reinjected back into the economy each year, the additional stimulus to growth results in a $167 billion boost to GDP and 1.05 million additional jobs in 2024.
