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What Happened The Last Time Trump Imposed Tariffs


Key Takeaways

  • As China retaliates against a 10% tariff levied Tuesday, recent history hints at the economic damage trade wars could cause.
  • A 2018 tariff against washing machines caused laundry equipment prices to surge, rising 9% higher than inflation while the tariffs were in effect through 2023.
  • Although the U.S. gained some manufacturing jobs from the tariff as appliance makers built factories in the U.S., they were costly—consumers collectively paid about $820,000 per job created, according to one analysis.

If you want to understand the effects tariffs have had on the U.S. economy in the past, the laundry room might be a good place to start.

Tuesday morning, China retaliated against a 10% tariff levied beginning at midnight. And while 25% tariffs on imports from Mexico and Canada were delayed for a month, they still loom ahead of the March 4 deadline for negotiations. U.S. consumers and the overall economy could be in for a rough ride, if a 2018 tariff against washing machines is any guide.

Tariffs have taken the spotlight in the early days of Trump’s administration, as the new president has made them a centerpiece of his economic agenda. Trump has touted tariffs as a way to raise revenue to run the federal government in place of income taxes and to push companies to build factories in the U.S. rather than outsourcing production to other countries where labor is cheaper.

Critics of tariffs, including most mainstream economists, said tariffs raise prices for consumers and hurt the economy, with few discernible benefits.

One way to gauge the possible effect of the new round of tariffs is to look at what happened in Trump’s first presidency when he imposed tariffs that were much narrower in scope than those currently being negotiated.

Washing Machine Tariff Put Customers Through The Wringer

In 2017, American appliance manufacturers asked the government to put tariffs on foreign washing machines, hoping to stave off competition from South Korean companies like LG and Samsung. In 2018, the Trump administration imposed a special tariff of 20%-50% on residential washing machines, which stayed in place until February 2023.

The effects were complex enough that both pro and anti-tariff organizations were able to spin the data to support their sides.

Just as tariff critics had predicted, washing machine prices rose. By 2019, prices for washers and dryers were up 12%, according to a study by independent researchers at the University of Chicago. That was about $90 extra per machine. Dryers were not taxed under the tariff but went up in price because retailers often sell the machines as sets.

And just as tariff proponents had wanted, some companies moved their washer production to the U.S. to get around the tariff. Notably, LG and Samsung both set up factories in America. The University of Chicago economists estimated the tariff policy had created roughly 2,000 jobs in the U.S.

But those jobs came at a cost. For every new job created, consumers paid $820,000 in inflated appliance costs, the Chicago researchers estimated.

At least one U.S. company that asked for tariffs ended up regretting them. One Whirlpool executive told NBC in 2018 that while the tariffs against washing machines had helped the bottom line, separate tariffs against steel and aluminum had driven up manufacturing costs so that overall tariff policy was a “headwind.”

After the tariffs were imposed, washing machine prices fluctuated from month to month but took an overall upward trend. By February 2023, when the protections expired, prices for laundry equipment (washers and dryers) were up 34% compared to the same time in 2018, according to data from the Bureau of Labor Statistics. Over the same period, prices for all consumer products were up 21%, according to the Consumer Price Index.

Other Tariffs Were More Costly

John Ryding and Conrad DeQuadros, economists at Brean Capital Markets, cited the washing machine tariff as a cautionary example of trade policy gone awry in an analysis Monday. Going further back in history, other tariffs have proved disastrous to the U.S. economy. The economists pointed to tariffs under William McKinley in the 1890s as causing bouts of inflation and being unpopular with the public at the time.

To some economists, Trump’s trade threats called to mind the 1930s, the Hawley-Smoot tariffs, which damaged the economy at the worst possible moment, sending the country spiraling deeper into the Great Depression that had just begun.

“Tariffs have regularly been followed by poor economic outcomes,” Ryding and DeQuadros wrote.


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