Does Trump's Tariff Make America Great Again? An Empirical Analysis of US-China Trade War Impact on American Business Formation (2018-2025)

Résumé 0

This study examines whether Donald Trump's tariff policies, particularly the US-China trade war initiated in 2018, delivered on promises to revitalize American manufacturing and create jobs. Using county-level business application data from 2018-2025, we analyze the relationship between tariff implementation and new business formation through linear regression analysis. Our findings reveal a statistically significant positive association between US tariffs on China and American business applications. However, when Chinese retaliatory tariffs are included in the analysis, their negative coefficient substantially exceeds the positive US tariff effect, suggesting that retaliatory measures largely offset the benefits of protectionist policies. Control variables including inflation rate, federal funds rate, and government spending show significant positive effects on business formation. These results indicate that while protectionist trade policies may stimulate domestic business formation, their effectiveness is significantly diminished by retaliatory responses from trading partners. The study provides evidence that unilateral tariff measures without diplomatic coordination produce limited net benefits, confirming that trade wars create scenarios where potential gains are neutralized by counteractions.