The United States’ tariff regime introduced during the Trump administration and largely maintained under the Biden administration has generated billions of dollars in customs duties while modestly depressing economic output and employment. Using the Tax Foundation’s General Equilibrium Model, the analysis quantifies the long‑run effects on GDP, capital stock, jobs, and household tax burdens.
Economic Impact of the 2024 Tariff Proposals
- A universal tariff of 10 %–20 % on all imports, plus a 60 % tariff on Chinese goods, is projected to cut long‑run GDP by 1.3 % before any foreign retaliation.
- The same tariff package would raise federal tax revenues by $3.8 trillion (dynamic estimate $3.1 trillion) over 2025‑2034.
Impact of the 2018‑2019 Trade War Tariffs
- Section 301 (China) and Section 232 (steel and aluminum) tariffs are estimated to reduce long‑run GDP by 0.2 %, the capital stock by 0.1 %, and eliminate ≈142,000 full‑time‑equivalent jobs.
- Removing those tariffs would reverse the GDP and employment losses, according to the same model.
Tariff Revenue Collections (through 2024)
- Total customs‑duty revenue from the trade‑war tariffs: > $264 billion.
- $89 billion (≈34 %) collected under the Trump administration.
- $175 billion (≈64 %) collected under the Biden administration.
- Before accounting for behavioral effects, the higher tariffs translate to an average annual tax increase of $625 per household. Actual collections have been $200‑$300 per household per year, reflecting lower incomes and reduced consumer choice.
Timeline and Scope of Major Tariff Measures
| Policy | Date(s) | Scope | Estimated Revenue (based on 2018‑2023 import values) |
|---|---|---|---|
| Section 232 – Steel | March 2018 (25 % tariff) | $29.4 bn of steel imports → $9 bn revenue | |
| Section 232 – Aluminum | March 2018 (10 % tariff) | $17.6 bn of aluminum imports → $1.8 bn revenue | |
| Section 232 – Derivative Products | Feb 2020 (≈25 % steel, 10 % aluminum) | ≈$0.8 bn revenue | |
| Section 301 – China (List 1‑4) | July 2018‑Dec 2019 | Tariffs ranging 10‑25 % on $≈$500 bn of Chinese goods → $77 bn revenue | |
| WTO Dispute – EU | Oct 2019 (up to 100 % on $7.5 bn) | 10 % on aircraft, 25 % on agri‑products | |
| Section 201 – Solar Panels & Washing Machines | Jan 2018 (4‑year tariffs) | Small tariffs: solar cells $0.2 bn, washing machines $0.4 bn | |
| Biden‑Era Expansions (2024‑2026) | May 2024 onward | New tariffs 25‑100 % on semiconductors, EVs, critical minerals, etc. on $18 bn of imports → $3.6 bn additional revenue |
Exemptions: Australia, Brazil, South Korea, Argentina, Canada, Mexico, Japan, the EU, and the UK have been excluded or placed under tariff‑rate quota (TRQ) systems, reducing the effective revenue from the original tariff rates.
Retaliatory Tariffs Imposed by Foreign Governments
- Retaliatory duties on $6 bn of U.S. steel/aluminum exports and $106 bn of other U.S. exports are estimated to generate $13.2 bn in foreign tariff revenue.
- These retaliation measures are projected to cut U.S. GDP and capital stock by < 0.05 % and eliminate ≈27,000 full‑time‑equivalent jobs.
- Unlike U.S. tariffs, foreign duties raise no revenue for the U.S. Treasury but increase the after‑tax price of U.S. goods abroad, reducing export competitiveness.
Trade‑Volume Effects
- Imports of tariff‑subject goods have declined since the tariffs were enacted, even before COVID‑19. The most pronounced drops involve Chinese products, which remain below pre‑war levels.
- The reduction in Chinese imports has been partially offset by increased imports from other countries, indicating a diversion effect rather than a net reduction in overall trade volume.
Summary of Key Numbers
- Long‑run GDP loss from 2018‑19 tariffs: 0.2 %
- Long‑run GDP loss from proposed 2024 tariffs: 1.3 %
- Total tariff revenue (2018‑2024): > $264 bn
- Household tax impact: $200‑$300 per year (actual), $625 per year (static estimate)
- Jobs lost (2018‑19 tariffs): ≈ 142,000 FTE; additional 27,000 FTE from retaliation
- Retaliatory tariff revenue (foreign): $13.2 bn
These figures illustrate that while tariffs have generated substantial customs‑duty revenue, they have also modestly eroded economic output, capital formation, and employment, with additional costs borne by households through higher prices and reduced consumer choice.
Source article: taxfoundation.org
