Keeping in line with the tariff debate, I find it important to point out a few quick details.
As you can see, the average tariff rate in the US has been flat for about a decade. I wouldn’t jump to conclusions and claim that the unprecedented economic growth after the financial crisis is strongly correlated with the tariff rate, but I will say that it helps. This theory requires more research. And making any changes to our tariffs at this point will only slow down economic activity.
That said, it is widely documented that other nations, such as the EU, will lose more than the US in a trade war. You can see this below as the US has economic openness as a percentage of GDP of about 20% compared to the EU at over 35%.
One way in which the US can be affected is with oil. As you can see below, the US has increased oil exports tremendously since lifting the oil export ban. So, if other nations place a tariff on US oil exports (imports from the foreign nation’s perspective) then this will be problematic.
To go along with this, the US exports 20% of our oil to China. It’s safe to say that even though China does not want a trade war, if we were to be aggressive towards two of their biggest exports, then they would do the same to our oil. When we include other nations that would likely block or restrict US oil exports, you are looking at about 46% ( the sum of the UK, Netherlands, Italy, France, Spain, and China) of our oil exports being in danger. That’s not a small amount. At $60/bbl, this amounts to an $11bn loss over one year. While this might not be much relative to total GDP, it is a meaningful number in terms of jobs in the US.
Again though, I am still betting we do not see any new tariffs. Over time this Trump bluff will be forgotten just like every other outlandish thing the President says.