Summary .

President-elect Trump has promised to impose 25% tariffs on all goods imported from Canada and Mexico, and tariffs as high as 60% on goods coming from China on day one of his new administration. What will these protectionist policies accomplish? Looking at research on the effects of the 2018–19 U.S.-China trade war might provide some insight. Researchers found that tariffs didn’t lower the cost of goods imported from China, and that U.S. consumers paid more for certain goods; that manufacturing jobs didn’t return to the U.S.; and that sectors targeted by retaliatory tariffs took a hit. Looking ahead, steps companies had taken to circumvent the effects of a new trade war with China, such as friend-shoring, might not be an effective hedge against future protectionist policies that install new barriers to trade with countries such as Mexico and Canada.

Last week, President-elect Donald Trump outlined a plan for sweeping new tariffs against three of America’s leading trading partners. In a post on Truth Social, his social network, he promised that he was ready to sign an executive order placing 25% tariffs on all goods imported from Canada and Mexico on day one of his presidency, with an additional 10% tariff on goods from China. This is on top of earlier threats of imposing 60% tariffs on China and a blanket tariff of 10% to 20% on other imports to the U.S. — a protectionist plan that could reshape the U.S. economy in ways that have little recent precedent.