President Donald Trump’s tariff on imported washing machines cost consumers in the United States $815,000 for every new job it created, according to a study by economists at the Federal Reserve and the University of Chicago.
The Fed’s Aaron Flaaen and the University of Chicago's Ali Hortaçsu and Felix Tintelnot found that the tariff resulted in $1.5 billion in added costs to US consumers, just $82 million of which went to the US Treasury.
The increase came after the tariffs caused washing machine prices to rise by an average of 12%. Dryer prices also went up the same amount, even though they weren’t affected by the tariffs. The report suggests retailers used the higher washing machine prices to increase their dryer prices. All told, washing machine prices went up about $86 and dryer prices went up about $92 a pop.
The report found that the policy did create new jobs, about 1,800 of them.
"Absent additional factors, the reports of increases in domestic employment attributed to this policy of roughly 1,800 workers would result in an average annual cost to consumers of over 815,000 USD per job created," the report said.
Where is the tariff money going?:
Though Trump has repeatedly bragged that the US Treasury is rolling in the cash from the tariffs, the researchers found that foreign manufacturers simply passed the cost on to consumers while domestic companies simply pocketed the extra profits.
“In addition to increased profitability of the domestic manufacturers, one other reason for the gap are cost increases for the foreign manufacturers associated with relocating production to the U.S.,” Tintelnot said, according to The Washington Post. “The market for washing machines is concentrated, and the domestic manufacturers certainly have market power.”
“Many consumers buy these goods in a bundle,” he added. “Part of the price increase for washers was hidden by increasing the price of dryers.”
Trump’s tariffs are a terrible deal:
Though the $815,000 per job price tag sounds astronomical, the Post noted that that number is “roughly in line with other estimates on the per-job cost of tariffs in other industries.”
“But those numbers are much higher than the typical cost of government-driven job creation, which works out to about $30,000 per job,” Christopher Ingraham wrote at The Post. “In other words, had the Trump administration simply left washing machines alone and raised taxes on American consumers by $1.5 billion, it could have poured that money into a federally funded initiative creating nearly 50,000 jobs, or about 27 times the number created by the washing-machine tariffs.”