And there are also plenty of ways that import restrictions can harm GDP growth instead of helping it. The clearest way is by raising prices for U.S. producers. Tariffs on capital goods and intermediate inputs make it harder for American factories to get the machinery and the inputs they need to operate. That causes them to cut production, which hurts growth. It’s important to note that the bulk of Trump’s tariffs have fallen mostly on these sorts of goods:
So there are many ways that import reductions can hurt growth. Trade warriors who naively assume that there are idle American factories and workers standing by, itching to spring into action to replace lost Chinese imports, should realize how improbable this scenario is. It’s much more likely that tariffs are forcing American factories to reduce production, leading American consumers to lower consumption. The effect has probably not been large enough to hurt the economy so far, but if the trade war drags on, the losses could mount.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.