Thread by @hancocktom

Writing this assessment of how the Trump's administration's trade war with China produced few clear wins provided a chance to read through some of the academic research on what happened. These were some of the more surprising findings bloomberg.com/news/articles/… 1/x

First, Chinese exporters generally didn’t lower prices of goods targeted by duties to make their products more competitive after the tariffs, meaning the cost of imports from China increased nber.org/papers/w25638

That surprised economists. “People would have predicted that the U.S. has market power because it’s a big buyer,” said @melovely_max of Syracuse University. “That turned out to be completely untrue”

Price increases were often absorbed in the form of lower profits for US retailers rather than being passed onto consumers, according economists who examined retail data bfi.uchicago.edu/working-paper/…

While prices didn’t adjust much, US import volumes from China did fall significantly in 2019. That likely shows how multinationals were able to shift production for US goods from China to countries like Vietnam, so the overall US trade deficit with the world was fairly stable

Second, Trump’s first tranche of tariffs was mainly on components (intermediate goods like auto parts), raising input prices for firms responsible for 80% of US exports, according to economists who examined confidential company data ideas.repec.org/p/fip/fedgif/1…

That raised costs and made US exports less competitive, reducing US export growth in the latter half of 2019 by about 2%, according to the economists

Duties on inputs led to lower employment by US exporters, according to economists who found the protection offered by tariffs was largely “offset by larger negative effects from rising input costs” ideas.repec.org/p/fip/fedgfe/2…

Third, though the direct impact of the tariffs was tiny as a % of overall GDP in both countries, some regions felt very severe effects. US counties hit by China’s retaliatory tariffs experienced higher unemployment which fed through to consumption declines nber.org/papers/w26353

Finally, even areas of the US home to industries like steel most protected by the new tariffs saw declines in manufacturing employment in 2019. That suggests protection didn't turn around employment in those areas, according to NYU economist Michael Waugh voxchina.org/show-3-173.html

There are a bunch of other data in the story from official and unofficial sources showing for instance how US companies continued to invest in China and that US manufacturing employment stalled in 2019 - but wanted to highlight the contributions from academics