What was the consensus of economists about the results of tariffs in Trump's first term? Did that come true?

 Grok says:

During Donald Trump’s first term (2017–2021), economists broadly agreed that tariffs, particularly those imposed on steel, aluminum, and Chinese goods, would have negative economic consequences for the United States. The consensus was rooted in economic theory, which generally holds that tariffs increase prices, reduce consumer purchasing power, and disrupt global trade, leading to lower economic output and potential job losses in industries reliant on imports. Key points of the consensus included:

1. Higher Consumer Prices: Economists predicted that tariffs would raise the cost of imported goods and domestically produced goods using imported inputs, with costs largely passed on to U.S. consumers. For example, a 2018 University of Chicago survey found that 93% of economists disagreed that targeted steel and aluminum tariffs would improve Americans’ welfare, citing price increases as a primary concern.
2. Economic Output and Employment Losses: Tariffs were expected to reduce U.S. GDP and employment, particularly in industries dependent on imported materials. Economists warned that higher input costs and retaliatory tariffs from trading partners (e.g., China, Canada, Mexico) would harm U.S. exporters, such as farmers, and industries like manufacturing. A 2018 Federal Reserve Bank of New York analysis cautioned that tariffs aimed at reducing the trade deficit would also reduce U.S. exports, with minimal net impact on the deficit.
3. Disproportionate Impact on Consumers and Industries: Studies projected that tariffs would disproportionately affect lower-income households, who spend a larger share of their income on imported goods, and industries reliant on global supply chains. For instance, economists Kadee Russ and Lydia Cox noted in 2018 that steel-consuming jobs outnumbered steel-producing jobs 80 to 1, suggesting significant job losses in downstream industries.
4. Inflationary Pressure: Economists anticipated that tariffs would contribute to inflation by increasing the cost of goods, though the extent was debated due to factors like dollar appreciation potentially offsetting some price hikes.
5. Limited Effectiveness in Achieving Goals: Many economists argued that tariffs would fail to achieve Trump’s stated objectives, such as significantly reducing the trade deficit or reviving manufacturing. They viewed trade deficits as driven by macroeconomicinal macroeconomic factors (e.g., savings and investment) rather than trade barriers alone, a perspective dismissed by the Trump administration.

Did the Consensus Predictions Come True?

The outcomes of Trump’s first-term tariffs largely aligned with economists’ predictions, though some nuances and counterpoints emerged. Below is an evaluation based on empirical studies and data:

1. Higher Consumer Prices:
   • Outcome: Studies confirmed that tariffs led to higher prices for U.S. consumers. A 2019 National Bureau of Economic Research study by Pablo D. Fajgelbaum and others found that U.S. importers bore nearly the entire burden of tariffs on Chinese goods, resulting in higher after-duty prices.
   • A 2019 University of Chicago study on washing machine tariffs showed prices rose by $86 per unit, with dryer prices also increasing by $92 due to package deals, costing consumers over $1.5 billion annually.
   • Posts on X echoed these findings, with a 2019 study cited by

     @crampell

     estimating a $1.4 billion monthly reduction in U.S. real income due to higher prices.
2. Economic Output and Employment Losses:
   • Outcome: The tariffs had mixed effects on employment and output. A 2019 Federal Reserve study found that tariffs reduced U.S. exports due to higher input costs, lowering manufacturing competitiveness and employment.
   • The Economic Policy Institute noted that while steel tariffs led to some job gains (e.g., 1,000 steel jobs), they caused significant losses in steel-using industries (75,000 jobs).
   • A 2023 U.S. International Trade Commission report found that tariffs reduced imports from China and stimulated some U.S. manufacturing, but overall employment in protected sectors showed no substantial positive impact.
   • Retaliatory tariffs, particularly from China on U.S. agricultural exports, hurt farmers, with losses estimated at $20 billion annually.
3. Disproportionate Impact:
   • Outcome: The Peterson Institute for International Economics estimated that Trump’s tariffs disproportionately harmed lower-income households, who faced higher costs for goods like clothing and electronics.
   • Industries reliant on imported inputs, such as agricultural machinery (e.g., Deere & Co.), saw reduced employment due to higher steel prices.
4. Inflationary Pressure:
   • Outcome: The Economic Policy Institute found that tariffs had “no correlation with inflation” in aggregate, with only fleeting price effects before 2020’s global downturn.
   • However, specific goods saw price spikes, and economists like Joseph Stiglitz warned of inflationary risks, though broader inflation was tempered by factors like a stronger U.S. dollar.
5. Limited Effectiveness in Achieving Goals:
   • Outcome: The trade deficit did not significantly shrink, as predicted by the Federal Reserve Bank of New York. Tariffs reduced imports but also exports, leaving the trade balance largely unchanged.
   • While some reshoring occurred (e.g., steel investment rose from $1.5 billion to $4.2 billion annually between 2017–2019), overall manufacturing revival was limited. Automation, not just trade, was a major driver of job losses since the 1990s.
   • A 2024 study cited by the White House claimed tariffs “strengthened the U.S. economy,” but this was an outlier, contradicted by mainstream analyses showing net economic losses.

Counterpoints and Trump Administration Claims:

• The Trump administration and supporters, like Stephen Moore of the Heritage Foundation, argued that tariffs drove economic growth by protecting industries and encouraging investment, pointing to a strong stock market during parts of Trump’s first term.
• The White House highlighted a 2024 study and a 2023 U.S. International Trade Commission report suggesting tariffs led to “significant reshoring” in steel and manufacturing.
• Former Treasury Secretary Janet Yellen reportedly stated in 2023 that tariffs did not significantly raise consumer prices, though this claim conflicts with most empirical studies.

Critical Examination: While the administration touted tariffs as a success, the overwhelming evidence supports the economists’ consensus. The reshoring and job creation in protected industries were modest compared to losses in downstream sectors and retaliatory trade impacts. The claim that tariffs had no inflationary effect is dubious given documented price increases for specific goods, though broader inflation was mitigated by external factors. The narrative of tariffs as a panacea for manufacturing ignores structural issues like automation and global supply chain complexity, which economists correctly emphasized. The administration’s reliance on selective studies or misinterpreted data (e.g., Brent Neiman’s critique of misused research) further undermines its claims.

Conclusion: The consensus among economists—that Trump’s first-term tariffs would raise prices, reduce economic output, disproportionately harm consumers, and fail to achieve trade balance or manufacturing goals—was largely accurate. Empirical studies confirmed higher consumer costs, limited net employment gains, and persistent trade deficits. While some industries saw investment, the broader economic costs, including retaliatory tariffs and supply chain disruptions, outweighed these benefits, aligning with economists’ warnings. The Trump administration’s counterclaims rely on outlier studies or oversimplifications, which do not withstand scrutiny against the robust evidence base.