New Study Finds Tariff War Could Cost 1.5 Million Jobs, $186 Billion in Economic Damage

A new study conducted for the Port of Los Angeles concludes that tariffs threaten nearly 1.5 million U.S. jobs and more than $186 billion in economic activity nationwide.

The potential risks are based on the impact of tariffs levied on cargo handled by the Sand Pedro twin ports of Los Angeles and Long Beach, the nation’s busiest container port complex. BST Associates, an independent economic consulting firm, conducted the study for the Port of Los Angeles.

The study, By the Numbers: Jeopardizing the National Benefits of Trade through America’s Busiest Port Complex, uses a digital map that shows sales, income and taxes at risk for every state due to tariffs, based on international trade through ports. The study also shows the economic benefits of these imports and exports to each congressional district and identifies the percentage burdened by tariffs.

“Every urban, suburban and rural community across our nation benefits from imports and exports moving through the San Pedro Bay ports, and ongoing tariffs are putting those benefits at risk,” Port of Los Angeles executive director Gene Seroka said. “Some regions and industries are already feeling the pain, and the damage to jobs, income and tax revenue could be crippling down the road.”

The study shows that tariffs imposed over the trade war of the past two years could add additional costs of $31 billion to $35 billion to consumers at the retail level and to the operations of American manufacturers who rely on imported raw materials and components to produce American-made products.

“The study focuses on the impacts of tariffs based on trade through the San Pedro Bay ports,” Seroka said. “The implications are much bigger when you consider all U.S. ports, so the effects that the Port of Los Angeles is seeing should concern all U.S. ports of entry.”

Cargo moving through the nation’s largest container port complex is valued at more than $380 billion and the economic activity it generates — including more than 3 million jobs nationwide — is a bellwether for the health of the overall U.S. economy, the study noted. Imports through the ports of Los Angeles and Long Beach flow to every state in the nation, and goods grown or manufactured in every state flow through these ports to reach global markets, predominantly Asia.

The vast majority of U.S. tariffs target trade with China, the world’s second-largest economy and America’s largest source of imported products, accounting for 54% of imports and 29% of U.S. exports moving through the San Pedro Bay ports, based on value.

The study noted that tariffs imposed by the U.S. on China resulted in retaliatory duties on American exports. As a result, it said the effect of these tariffs present a threefold disadvantage for U.S. businesses and workers. Five countries or trading blocs have imposed retaliatory tariffs on exports from the U.S.: China, the European Union, India, Russia and Turkey. For all but China, these are in retaliation for the Section 232 tariffs on aluminum and steel. For China, they are in retaliation for both the Section 232 and Section 301 tariffs.

First, import tariffs increase costs for U.S. consumers and producers. Second, tariffs make foreign products cheaper to manufacture, putting U.S. manufacturers at a cost disadvantage in the marketplace. Third, retaliatory tariffs reduce the demand for U.S. exports, putting U.S. companies and jobs at risk as foreign consumer markets look elsewhere for goods and products.

Cargo volumes at the Port of Los Angeles for October reflected these trends, the study said, marking 12 consecutive months of declining U.S. exports, 25% fewer ship calls and a 19.1% decrease in volume compared with October 2018.

The U.S. agricultural sector has paid a heavy toll, with 26% to 51% of exports from all 50 states hit by tariffs, based on trade through the San Pedro Bay ports, according to the study.

Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

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