FACT:

Solar power installation in the U.S. is suddenly slowing down. 

 

THE NUMBERS: 

Solar power as share of U.S. electricity generation

2050:    22%*
2021:      4%
2010       1%

* “Annual Energy Outlook 2022”, Energy Information Administration, reference case, assuming no major change in policy or external environment.

WHAT THEY MEAN:

A cautionary tale, unfolding this spring in the American solar power industry, as hopes of “de-carbonization” in electricity begin to clash with an “industrial strategy” meant to promote photovoltaic manufacturing in part through reliance on tariffs, and a recently booming U.S. solar power-generation industry suddenly begins to fade.

“De-carbonization”:  One of the Biden administration’s top-tier climate policy goals is to use less coal and other greenhouse gas-producing hydrocarbons, and use more alternative energy sources, to generate electricity.  Solar power, a core element of this effort, provided about 4 percent of U.S. electricity in 2021, up from less than 1 percent a decade ago.  With a battery of tax incentives, government purchases, and other policy tools in place, U.S. homes, buildings, and utilities added 23.6 gigawatts of solar capacity – just under half of all new U.S. electricity generation – last year.  The Energy Department’s yearly “Annual Energy Outlook”, released in March, predicts that all else equal, the solar share of U.S. electricity will reach about 10% in 2030 and 22% – in practical terms, about 1,000 gigawatts of a total just above 5,000 gigawatts – by 2050.

“Industrial strategy”: Meanwhile, the administration also hopes to use U.S. government policy tools to help make the U.S. a large producer of (among many new products) the actual photovoltaic cells, modules, and panels that turn the sun’s light and heat into electricity.  Most of these are now made in and imported from Asia, where rapidly growing capacity has helped to drive down solar panel prices by about 90% over the past decade.  China makes about 70% of the world’s output, Southeast Asia 15%, and Korea 5%.  The U.S. is at about 3% of world production – a small fraction of world output, but not a trivial total, which translates to about 7.5 gigawatts of electricity, or about a third of annual U.S. solar power installation.  A series of trade law complaints from U.S. manufacturers over the past decade have tried to shift this balance through appeals for tariffs.  The outcomes have been equivocal to date; the newest such effort, however – an ‘anti-dumping’ case filed by a small California company – may be enough to set back actual American use of solar power for years.  To review –

(1)    The normal (“MFN”) tariff on photovoltaic cells, modules, and panels is zero.  Beginning in 2012 and 2014, “anti-dumping” and “countervailing duty” suits have imposed tariffs on Chinese-made photovoltaic cells and modules in a range (depending on the company) of 13.3% to 249.95%.  These laws are deliberately depoliticized, with litigation handled by civil servants, and currently oversee “orders” (i.e. tariffs) on 644 products (mostly steel) to offset respectively unfairly low pricing and subsidies defined by the intricate terms of the two laws’ 1994 revision.  Cabinet officers, presidents, and similar individuals have little ability to change these decisions.

(2)    As frequently happens with tariffs, however, the main effect of the 2012 and 2014 decisions seems to have been to shift buyers’ orders a bit south, particularly to Malaysia, Vietnam, Thailand, and most recently Cambodia.  A second suit led the Trump administration in 2018 to impose a complex four-year global “safeguard” tariff lasting for four years, beginning at 30% and scaling down to 15% in 2021, and applied when solar panel imports rose about 2.5 gigawatts.  Known as “Section 201” in trade-bar jargon, the safeguard contrasts with the anti-dumping and countervailing duty laws, as it allows Presidents to set a wide variety of import management or restrictions, or alternatively to decline any action on grounds of larger national interest.  The 2018 tariffs expired last February, and based on a recommendation from the International Trade Commission, the Biden administration decided (a) to extend the safeguard for four years, but (b) raised the duty-free level to 5 gigawatts – more or less the current level of cell and module imports – and eliminated tariffs on the “bifacial” panels especially popular with utilities.

(3?)    Most recently, in April the Commerce Department began investigating yet another anti-dumping suit, from a California company, alleging that the Vietnamese/Malaysian/Thai/Cambodian suppliers of panels are taking Chinese panels and reselling them.  This has opened the possibility of *retroactive* tariffs – in principle, as high as 250 percent, though as with the Chinese case potential outcomes likely would vary by source – as well as higher future costs.  This may be more than the recently strong U.S. market for solar power can absorb:  a survey by the Solar Energy Industry Association three weeks ago, for example, finds Association members delaying or scaling back 318 of their 596 current utility-scale projects out of concern over the costs and penalties this new antidumping case may bring  It has also led to a decision to extend the life of two Indiana coal-fired electricity plants for two years.

In general, then, a lesson in the limits and drawbacks of tariffs as industrial strategy tools; an illustration of the potential resulting clash of industrial strategy and decarbonization, as the cost of tariffs begins to overpower the tax incentives and purchasing policies meant to promote renewable energy; and a sudden question about hopes for rapid “de-carbonization” in electricity.  Not at all an outcome anyone would want; but one, depending on the next steps in this new case, in which the most damaging outcomes can still be averted.

FURTHER READING

The Energy Information Administration has energy data, trends, and projections in “Annual Energy Outlook 2022.”

National Economic Council Chair Brian Deese outlines a broad concept of industrial strategy, with climate change and clean energy as a core example.  A key paragraph:

“By enacting long-term, technology-neutral incentives to generate zero-carbon energy and innovation, we can lay the foundation for more American-made clean-energy technologies and bolster domestic supply chains.  We can partner with allies to expand our collective capacity to produce clean energy, while opening new export markets for American products. And we can do it in a way that lowers immediate costs for Americans, keeps our affordable-energy advantage, and accelerates growth in energy communities transitioning toward industries of the future.”

Full text.

The National Renewable Energy Laboratory has a primer on solar cell, panel and module manufacturing.

Also from the NREL, a very useful summary/timeline of the intricate web of production data, trade flows, and the now-intricate web of anti-dumping, countervailing duty, and safeguard tariffs on photovoltaic cells and modules.

Expert recommendation, December 2021:  The U.S. International Trade Commission’s 593-page report recommending extension of the 2018 ‘safeguard’ tariffs on solar panels, cells, and modules, with analysis and data on production and trade.

“If you’re not into the whole brevity thing”, February 2022:  The White House’s epically verbose announcement (“Proclamation of action to continue facilitating positive adjustment to competition of certain crystalline silicon photovoltaic cells, whether or not fully assembled into other products”) of extension of the safeguard tariffs.

A new suit, April 1, 2022:  the Commerce Department announces a new anti-dumping investigation.

And its impact, April 26, 2022 – The Solar Energy Industry Association surveys worried members, finds sudden pullbacks, delays, and interruptions of solar power projects.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT:

Ukraine economy to contract by 35% this year. 

THE NUMBERS: 

Average monthly cargo tonnage for Port of Odesa

Jan.-Dec. 2021:        1.9 million tons
March-April 2022:     0 tons

WHAT THEY MEAN:

From the Commerce Department’s Monday announcement, lifting Trump-era tariffs on Ukrainian steel:

“[T]he United States of America will be temporarily suspending 232* tariffs on Ukrainian steel for one year. Ukraine’s steel industry is uniquely important to the country’s economic strength, employing 1 in 13 Ukrainians with good-paying jobs. … Many of Ukraine’s steel mills have continued to pay, feed, and even shelter their employees over the course of fighting. Despite nearby fighting, some Ukrainian mills have even started producing again. Creating export opportunities for these mills is essential to their ability to continue employing their workers and maintaining one of Ukraine’s most important industries.

A look at the role of trade in Ukraine’s pre-war economy suggests that the Commerce Department’s hope to support Ukrainian exports (and the April decisions by the U.K. and European Union to lift all tariffs on Ukrainian goods) is well-founded. But it is probably incomplete, and the western governments need to be thinking about logistics as well.

By way of introduction, in October 2021, the International Monetary Fund’s semiannual “World Economic Outlook” projected a modest 3.5% growth rate for Ukraine. The April 2022 WEO made no guesses at any of these figures, except for a -35% drop in GDP. Such a contraction is one of the worst ever recorded: Compare, for example, the -10.5% decline in Greek GDP in 2011, and the -7.6% and -13.1% declines for Thailand and Indonesia in 1998, rightly remembered in these countries as national tragedies.

Export losses will likely account for a large part of this contraction. According to the World Trade Organization, exports accounted for 44% of Ukraine’s pre-invasion GDP. ($49 billion in goods exports + $15 billion in services exports, in a $152 billion economy.) This makes Ukraine, though a relatively small economy, roughly as export-reliant as Germany, Korea, or Mexico. The main products were $10 billion in iron and steel, $8.5 billion in corn and wheat, and $5 billion in sunflower oil, and the its main pre-war customers were the EU at 35% of all Ukrainian exports, followed by China at 15%, then Russia and Turkey at about 5% each.

About 75% of Ukraine’s exports gets to buyers through ten Black Sea ports; Odesa, the largest, handled 22.5 million tons of wheat, corn, iron, and other cargo last year. The vast majority of this trade is now blocked, even for grains already harvested or mills still producing metal. Deputy Infrastructure Minister Yurii Vaskov, speaking last week, reports that all ten are closed, either by Russian naval blockade (Odesa) or military occupation (Mariupol, Kherson), while the International Maritime Organization knows of 84 civilian cargo ships trapped in Ukrainian ports. The effects are showing up in U.S. trade data, which already show U.S. imports of Ukrainian steel down by about two-thirds, from 20,700 tons in January to 12,900 tons in February and 6,800 tons in March.

With this in the background, tariffs are always a consideration but not the primary issue. President Zelensky’s appeal yesterday for help in reopening the ports highlights the core problem; in the meantime, Ukraine’s government is trying to channel as many of its exports as possible through smaller Danube River ports, along with railways connecting to Poland, Slovakia, Hungary, and Romania. By Vaskov’s analysis, this accommodated 3.5 million tons of cargo in April — about a quarter of last year’s 12.5 million tons per month — and may be able to manage 5 million tons a month by fall. With this in the background, the tariff relief programs offered by the Biden Administration, the U.K., and the EU are useful as both practical and easy policy steps and as moral support, but need a complementary plan to help Ukraine find ways to move the actual metal and grain to their buyers.

* “232” referring to “Section 232” of U.S. trade law.

FURTHER READING

The WTO’s snapshot of Ukraine’s trade profile, 2021.

Vaskov of the Infrastructure Ministry on efforts to shift from Black Sea maritime export to rail and river.

U.S. Department of Agriculture on Ukraine’s role in world agriculture (No. 1 in sunflower oil production and exports, No. 4 for wheat exports, No. 5 for corn exports).

The International Maritime Organization’s latest update on cargo ships trapped in Black Sea ports: https://www.imo.org/en/MediaCentre/HotTopics/Pages/MaritimeSecurityandSafetyintheBlackSeaandSeaofAzov.aspx

Ukraine is a principal supplier of grains to Egypt, Indonesia, Bangladesh, Turkey, and other mid- and low-income countries. The UN World Food Program fears 76 million people will begin to go hungry if grain exports do not resume.

And a first-hand late April National Public Radio report from the Odesa Port.

Tariff announcements

The United Kingdom government announces removal of tariffs on Ukrainian goods.

The EU joins.

And Commerce Secretary Gina Raimondo this past Monday announces a year-long suspension of Trump-era steel tariffs.

And GDP figures in context

What does Ukraine’s wartime contraction of -35% mean? Some other points of comparison, drawn from the International Monetary Fund’s World Economic Outlook database (which covers the years 1980-2022):

1932: Great Depression contraction of -12.9% in the United States
1998: Great Recession contractions of -13.1% in Indonesia and -7.6% in Thailand;
2011: Greece’s -10.5% contraction in debt crisis;
2011: Libya’s -67% contraction in government collapse and conflict.  This appears to be the sharpest contraction in the database.
2015: Yemen’s -28% drop as civil war spreads country-wide;
2019: Venezuela’s -35% contraction 2019, as state oil company PDVESA defaults on bond obligations.
2021: Myanmar’s -17% drop after February coup d’etat

The current (April 2022) WEO database.

… and for comparison, the October 2021 edition.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT:

World count of child labor, 2020: 160 million boys and girls. 

THE NUMBERS: 

International Labor Organization estimates of child labor worldwide

2020        160.0 million
2016         151.6 million
2012         168.0 million
2008        215.2 million
2004        222.3 million
2000        245.5 million

WHAT THEY MEAN:

Every four years since 2001, the venerable International Labour Organization has published an estimate of child labor* numbers and rates around the world. The first edition, looking at the world of 2000, found 245.5 million of the world’s 1.53 billion children in child labor. The most recent, out in June 2021, reported 160 million child laborers in a slightly larger population of 1.67 billion children. That is, over 20 years the actual number of child laborers fell by 35%, and the share of the world’s children in child labor dropped from 16% percent to 9.6%.

The 2021 report, though, also found something surprising and distressing. Between 2016 and 2000 —for the first time in the series — the ILO’s count of working children rose.  The estimate for 2016 had been 151.6 million boys and girls in child labor; thus the 2020 report’s 160 million (a pre-COVID number) meant about 8.4 million more. Equally striking and perhaps even more discouraging, almost all of this rise in child labor was among younger children aged 5-12.

What has happened? Three closer looks at the 2020 findings suggest a pattern, and perhaps part of a response:

1. Child labor is mostly rural: The American mental image of child labor draws much from America’s 20th-century activism and legislative reforms: Progressive-Era photographs of wan children in coal mines and textile mills; factory-focused state laws and a temporarily successful  national law in the 1910s; the Fair Labor Standards Act drawn up by Frances Perkins’ Department of Labor in the 1930s. Child labor today, however, is mainly agricultural work. The ILO’s report finds 70% of child labor — about 112 million of the world’s 160 million working boys and girls — in rural areas, principally in small family-run farms and enterprises. Another 20%, or 32 million children, are in low-level urban services. “Industry,” which in ILO usage includes construction sites, mines, and factories, accounts for 10.3% or 16 million child workers, and a smaller 6% of child labor among young children aged 5-11.

2. Child labor is mostly family-based: 72% of child laborers are in “family work” as of 2020. This is a much higher share than the 63% the ILO reported for 2016. Employment of child labor in private companies, meanwhile, has dropped from 31.9% in 2016 to 17.3% in 2020.

3. Child labor is growing regionally concentrated: On close reading, the ILO’s 2021 data do not really show a worldwide upward turn, but regional trends that have begun to diverge. In Asia, in the Western Hemisphere, and in rich countries, child labor counts and rates continue to fall; taken together, the child labor count in these regions fell from 82.5 million in 2016 to 58.6 million in 2020.** Counts rose, however, in sub-Saharan Africa and also in the Middle East, and the ILO’s “Europe and Central Asia” region. In pure numbers, most of the growth came in sub-Saharan Africa, where the ILO’s count rose from 70 million in 2016 to 86.6 million — now more than half the world total — in 2020, and from 6.7 million to 10.7 million in the Middle East and Europe/Central Asia.

How might policies, both within countries and internationally, respond? African patterns of child labor mirror the world pattern, except more intensely: 82% of African child labor is in rural areas and in agriculture (with 5.3% in “industry”), and likewise 82% of African children involved work in family enterprises and farms rather than for companies or in itinerant “odd job” work. With this in the background, laws and enforcement programs along the lines of the 20th century U.S. experience are important. But the core challenge appears to be finding ways to ensure that parents have the financial ability and incentives to keep children in school.  Here Latin American experience may offer a model: In the 1990s and 2000s, Brazil and Mexico were able to drive down child labor rates more rapidly than development alone could do, by providing small stipends to families certifying their children were in school for regular hours.

* Covering children from the ages of 5 to 17. “Child labor” is defined as meaning any work for children aged 5 to 14, and work above 14 hours per week for children aged 15 to 17.

** Breaking this out by region, child labor in Asia has dropped from 113 million in 2008 to 70 million in 2016, and 49 million in 2020; in Latin America and the Caribbean, from 14 million to 10.5 million and 8.0 million; in high-income countries, from an estimated 2 million in 2016 to 1.6 million in 2020.)  From 2016 to 2020, child labor counts rose from 1.2 million to 2.4 million in Arab states, and from 5.5 million to 8.3 million in Europe and Central Asia.

FURTHER READING

The ILO’s June 2021 report on worldwide child labor counts and trends in 2020.

Policy

The Department of Labor’s International Labor Affairs Bureau looks at child labor rates and policy around the world.

… and Labor Secretary Martin Walsh outlines U.S. policy to the ILO’s 2021 conference on child labor.

The ILO on lessons from reducing child labor through education policies in low-income countries.

And the Inter-American Development Bank reviews Brazil’s “Bolsa Familia” program, credited with sharply reducing child labor and infant mortality rates in the 1990s and 2000s.

And the American experience

The National Archives reprints Lewis Hine’s classic photographs of child labor in early 20th-century American streets, mines, and factories.

BLS recounts the development of U.S. child labor law, from a Connecticut statute in 1913 through the Fair Labor Standards Act of 1938.

… and the Government Accountability Office, in 2018, looks at physical risks and child labor enforcement for America’s contemporary working children (including in legally permissible summer jobs, family farm work, and so forth as well as illegal “child labor”). In the 2010s, about 700 Labor Department investigations each year found child labor law violations. These were most common in “leisure and hospitality,” but that may reflect more frequent investigations in these industries, as opposed to higher rates of child labor.  GAO does not venture a guess at the scale of child labor in the U.S., but does conclude that “since 2011, data indicate that the number of children working is increasing.”

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT:

“Section 301” contribution to U.S. inflation rate; range of estimates: 0.3% to 1.3%?

 

THE NUMBERS: 

U.S. goods imports from China

Jan.-Feb. 2022        $90.1 billion
Jan.-Feb. 2018        $84.6 billion

WHAT THEY MEAN:

Reviewing her limited short-term options for easing inflation, Treasury Secretary Janet Yellen last week noted possible removal of Trump-era tariffs on Chinese goods. Three bits of background data on these tariffs, then some tentative conclusions:

1. Scale: Tariff System Roughly Doubled in Size: In 2017, the last full year before imposition of the administration’s “Section 232” and “Section 301” tariffs,* the U.S. tariff system brought in $32.9 billion in revenue on $2.34 trillion in imports. Dividing tariff revenue by import value, this yields a “trade-weighted” tariff average of 1.4%, though in a system (as PPI’s Ed Gresser noted in testimony last week) very unevenly weighted toward taxation of consumer goods and low-income families. By 2019, the administration had added to this system a battery of administratively imposed tariffs, including:  (a) “232” tariffs of 25% on steel and 10% on aluminum, valued in 2017 at about $50 billion; (b) “301” tariffs of 7.5%, 10%, and 25% on about $350 billion in Chinese goods, and (c) a few smaller decisions such as “201” or “safeguard” tariffs on washing machines and solar panels.

In 2021, all this brought in $85 billion on $2.83 trillion in imports, essentially doubling the overall U.S. tariff average to 2.9%. As of early 2022, the Biden administration has unwound some of the metals tariffs through agreements with the EU, Japan, and the U.K.; the tariffs on Chinese goods, though with some promise of a revived “exclusion” process for businesses especially damaged by extra tariff costs remain in place.

2. Effects on U.S. Imports from China Noticeable but Modest: China’s share of U.S. imports has dropped, but the actual value of imports from China is now above pre-tariff levels. More precisely, imports of Chinese-made and -assembled goods totaled $506 billion in 2017, or 21.6% of overall U.S. imports. The Chinese import total dropped temporarily after the 301 tariffs went into effect over the course of 2018 and early 2019, to $451 billion or 18.1% of a $2.493 trillion 2019 total. By 2021, though, they had rebounded to $505 billion — essentially equal to the figure for 2017, though this was a smaller share of a much expanded $2.83 trillion U.S. import total.**

3. Little if Any Effect on China’s Overall Exports: The larger “301” impact on China’s global trade seems very small. Statistics published by China’s Ministry of Commerce show Chinese worldwide exports at $2.42 trillion in pre-tariff 2017, then $2.66 trillion in 2018 and a slightly dented $2.64 trillion in 2019, followed by a post-COVID surge to $3.3 trillion in 2021. This suggests that any damage to China’s export economy was small and quickly healed.

4. U.S. Economy and Inflation: Finally, returning to the Treasury Secretary’s concerns and setting trade flows aside, tariffs are generally an unattractive form of taxation. This is because they not only directly raise the cost of imported goods as a sales or excise tax would, but in contrast to sales or excise taxes, they also enable rent-seeking price increases throughout the domestic economy. These neither increase supply nor move demand towards an equilibrium, and therefore have both growth-reducing and inflation-encouraging effects.

Taken as tax policy, the “232” tariffs on steel and aluminum raised metals-buyers’ tariff payments from $0.3 billion in 2017 to $3.2 billion in 2021, or by about $3 billion per year. The “301” tariffs are likewise focused on industrial inputs bought heavily by manufacturers and construction firms ($3 billion more on auto parts, $2.5 billion on electrical components, $1.1 billion on basic chemicals, and so on) and much more expensive. With Chinese import totals for 2017 and 2021 essentially identical, buyers paid $13.5 billion in tariffs in 2017, and $56.6 billion in 2021. Estimates of the 301 contribution to last year’s 7% spike in U.S. inflation range from 0.3% to 0.5% from higher import prices, to a more recent Peterson Institute estimate of 1.3% with domestic-price-raising effects included.

Hence Dr. Yellen’s interest. Her cautious comment on a potential decision to dial tariffs back: “There would be some desirable effects. It’s something we’re looking at.”

*  “232” and “301” stand for sections of U.S. trade law.  The 232 section enables Presidents to impose tariffs on ‘national security’ grounds; the 301 section enables them to impose tariffs as retaliation for overseas policies which impose a “significant burden on U.S. commerce”.

** On the other side of the trade-balance sheet, U.S. export trends to China followed a similar post-tariff-and-Chinese-retaliation track, dropping from $130 billion in 2017 to $106 billion in 2019, then rebounding to $151 billion in 2021.

***  Had China retained the 21.6% share imports it held in 2017, the 2021 total would have been around $600 billion.  (Assuming all else equal, of course.) Vietnam, whose exports to the U.S. jumped from $46 billion to $102 billion in these years, picked up about half of the missing $100 billion; secondary beneficiaries include India, Mexico, and a few other mid-income countries.

 

FURTHER READING

 

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week