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Trump's washing machine tariffs are costing Americans almost $100 more per appliance

American manufacturers have also jacked up the cost of their appliances, in order to match the higher price of their competitors.
A family shops for washing and drying machines at Lowe's Home Improvement store in East Rutherford, New Jersey on May 21, 2018.
A family shops for washing and drying machines at Lowe's Home Improvement store in East Rutherford, New Jersey on May 21, 2018.Ted Shaffrey / AP file

A little more than a year after President Donald Trump slapped a 20 percent tariff on imported washing machines, new research finds that American shoppers have been the ones to pay the price.

A study conducted by two researchers at the University of Chicago and a Federal Reserve Board Governor found that washers cost an average of 12 percent more after the imposition of the tariffs, or roughly $86 to $92 more per appliance.

“It’s a good example of how the benefits of free trade are extremely diffuse but then the benefits of protectionism are concentrated,” said David Dollar, a senior fellow at the Brookings Institution.

Collectively, Americans are paying more than $1.5 billion extra every year from this tariff alone. Another recent study by a trio of economists from Princeton and Columbia universities and the New York Fed found that the combined impact of all the Trump administration’s trade sanctions costs Americans $1.4 billion each month.

Although the tariff studied by the University of Chicago researchers was only on imported washing machines, the study found that the price increases were significantly more widespread. “Taking the effects on both goods together, the overall tariff elasticity of consumer prices is above 100 percent for the 2018 safeguard tariffs,” they wrote. “The costs of these 2018 tariffs are substantial.”

The researchers found that the price of clothes dryers rose in tandem with washing machine price increases, even though dryers weren’t impacted by the tariffs. The study also found that domestically manufacturers raised prices on their washing machines, as well. All the big brands studied raised their prices by a range of 5 percent to as much as 17 percent.

“Firms are operating in competitive markets and they’re going to try to charge what they can,” Dollar said. When that competition is stifled, companies don’t have to worry as much about being priced out of a market if their products are more expensive. “Free trade is a great anti-monopoly policy,” he said.

Despite the president’s contention that the import tariffs on washing machines would create more American jobs, the new study found that the number of jobs created was very small, only around 1,800, but at a cost of $815,000 per job. And although Trump has said that the revenues are collected by the U.S. government from import tariffs, the researchers also found that this is not the case. The tariffs on imported washing machines and machine parts brought in a mere $82 million over the course of a year.

Tariffs can give a boost to the profits of domestic producers, but Dollar said ordinary workers rarely see those gains. “In most companies, it’s primarily benefiting the shareholders. The actual employment generation is usually very small. Firms expect these to be temporary, so they raise prices but they don’t employ more people,” he said. “It’s not an efficient way to create employment.”