| Year | Percentage |
|---|---|
| 2023 | 10.3% |
| 2020 | 10.1% |
| 2016 | 10.9% |
Here’s Vice Presidential candidate Senator J.D. Vance, pitching higher tariffs in late July and saying no price for toasters would be too high. And there was the same Mr. Vance, a week earlier, denouncing high prices and their toll on middle-class family budgets: “Many of the people that I grew up with can’t afford to pay more for groceries, more for gas, more for rent.”
Visionary poets like Walt Whitman can get away with this sort of thing. (Song of Myself, verse 51: “Do I contradict myself? Very well, I contradict myself. (I am large, I contain multitudes.)”.) Politicians struggle. Challenged in a TV interview a few days later, Vance tries hard to have it both ways, with a claim about earlier Trump-era tariffs:
“[M]anufacturing came back and prices went down for American citizens. They went up for the Chinese but went down for our people.”
Is he right? In fact, manufacturing growth slowed down while prices went up. The two main Trump-era tariffs went onto steel and aluminum in March 2018 (“Section 232”), and most Chinese-made goods (“Section 301”) — though toasters were exempted — in three pulses from September 2018 to mid-2019. Overall, this raised average “trade-weighted” U.S. tariff rates from 1.4% to 3.0% as of 2019. Since then, the figure has dropped back to 2.4%, as some purchasing shifted from China to Vietnam and other countries. Here’s the price and output data afterward:
Prices: The U.S. International Trade Commission’s 2023 report on the Trump-era tariffs is the standard source here. It finds prices up for families buying consumer goods and also up for manufacturers, construction firms, and others buying metal. The representative quotes:
Steel and aluminum (pg. 124): “The increase in tariffs on steel and aluminum imports increased the relative price of imports and led consumers of steel and aluminum to increase sourcing from domestic suppliers. This increase in demand for domestic production of steel and aluminum resulted in increases in the price of domestically produced steel and aluminum and the quantity of domestic steel and aluminum production in these industries. However, the higher prices of steel and aluminum translated into higher costs of production inputs for downstream industries. This effect negatively impacted the downstream industries that purchase steel and aluminum because costs increase per unit of production.”
Chinese goods (pg. 145): “[T]he tariffs did not have a significant impact on the price received by Chinese exporters. On the other hand, the elasticity of the importer price with respect to the tariffs is close to one, indicating that importer prices rose about 1 to 1 in response to the tariff increase. This is consistent with the recent work of Amiti et al. (2019), Fajgelbaum et al. (2020), Carvallo et al. (2021), and Jiao et al. (2022), who also largely estimate full pass-through of recent tariff actions from exporters to importers.”
Academic literature, along with reviews by Federal Reserve staff economists, concurs. These generally converge on a finding that the tariffs raised overall U.S. prices in a range of 0.3% to 0.5%, with the highest estimate a bit above 1.0%.
Output: With respect to manufacturing trends afterward, the ITC’s report concludes that (as of 2021) the steel and aluminum tariffs had raised the two metals’ output by about $2.2 billion, and shrunk the output of auto parts, machinery, tools, and other metal-using manufacturers (including household appliances such as toasters) by about $3.5 billion. On net, therefore, an overall slight shrinking of U.S. manufacturing. (They didn’t do a similar estimate of the China tariffs’ impact on consumers and firms buying inputs.)
More broadly, the post-tariff trend has been somewhat slower growth in manufacturing output and employment, though not an overall contraction. The Commerce Department’s Bureau of Economic Analysis, which calculates U.S. GDP stats, reports that in 2017, manufacturing made up $2.1 trillion of a $19.6 trillion American economy — that is, industries making planes, cars, semiconductor chips, frozen meat, refined petroleum, medicines, plastics, etc. accounted for 10.9% of overall output just before the tariffs. By 2019, their $2.2 trillion output was 10.5% of a $2.2 trillion economy; after a sharp drop to 10.0% in 2020 during the COVID pandemic, it rebounded to 10.3% in 2023 ($2.29 trillion of a $22.38 trillion economy). So manufacturing continued to grow, but makes up a somewhat smaller part of the U.S. economy than before the Trump-era tariffs.
Alternatively, in terms of “real,” inflation-adjusted growth, U.S. manufacturing grew by $33.5 billion on average per year during the Obama presidency, measuring from the financial crisis low of 2009 to 2017. Since 2018 it has grown by $30.2 billion per year, again slightly more slowly after the tariffs than before.
Employment: The employment story is similar – a slowdown in net manufacturing job creation, and a somewhat smaller share of total employment. According to the Bureau of Labor Statistics, in July of 2017, manufacturers employed 12.5 million of 146.8 working Americans, or 8.5% of all jobs. As of July 2024, the figure is 13.0 million of 158.7 million jobs, or 8.2%. Alternatively, again looking back to the Obama era, from the financial crisis low in mid-2009 to mid-2017, manufacturers added a net of 795,000 jobs. This was an average net gain of 99,500 jobs per year. Since mid-2017, they’ve added another 480,000, for 68,600 jobs per year. Or, in terms of wages, BLS’ stats find manufacturing workers earning about 27 cents more per hour than the national average in 2017 (a 1.0% advantage), and 29 cents per hour less (a 1.0% disadvantage) by 2021.
So: A lot goes into these big numbers – economic shocks and booms, career choices of young workers, innovation and adaptation of new technologies, etc. But the overall data from BEA and BLS make ITC’s conclusion that the 2018/19 tariffs raised prices and slightly shrank U.S. manufacturing look pretty strong. Vance’s backward-looking claims of ‘lower prices’ and ‘coming back’ don’t hold up. You can, however, be pretty confident about his promise that with an added tariff of 10% or 20%, toasters – along with other home appliances, groceries, gas, TV sets, refrigerators, cars, medicine, toothpaste, and consumer goods generally – will cost more.
Rhetoric –
Whitman’s Song of Myself (see verse 51).
Sen. Vance on toaster prices being too low.
… but prices are also too high.
… and for a longer tariffs-and-prices exchange, an August 25th “Meet the Press” interview transcript.
Data –
USITC’s March 2023 report on Trump-era tariffs (with modeling and evaluation through year 2021).
GDP-by-industry data from BEA.
… and employment and wage stats from BLS (in “Employment, Hours, and Earnings”).
And some more on toasters –
Vance’s toaster-price rhetoric appears to have contaminated the kitchen-appliance Internet with a moldy spread of opportunistic ‘made-in-USA toaster’ false positives. Discarding these, our search finds that no small home pop-up toasters appear to be made in the United States at the moment. U.S. factories do, however, produce kitchen and other home appliances – according to BLS, about 61,500 people work in appliance production – and several firms (e.g. Tennessee-based Holman Star) make big conveyor-type toasters for restaurants and hotels. They sell for $1,000 and up. Alternatively, the UK’s Dualit makes its “Classic” line by hand in Sussex, starting at £170 (=$222).
BLS on home-appliance industry employment and pay.
And tariffs appear to be making it harder, not easier, to make these things here. From the political right, National Review’s Dominic Pino reports on toasters and American kitchen appliance-makers’ unhappy experience with Trump-era metals tariffs.
