New China Tariffs Increase Costs to U.S. Households https://libertystreeteconomics.newy...-tariffs-increase-costs-to-us-households.html Tariffs on $200 billion of U.S. imports from China subject to earlier 10 percent levies increased to 25 percent beginning May 10, 2019, after a breakdown in trade negotiations. In this post, we consider the cost of these higher tariffs to the typical U.S. household. recent study found that the 2018 tariffs imposed an annual cost of $419 for the typical household. This cost comprises two components: the first, an added tax burden faced by consumers, and the second, a deadweight or efficiency loss. ..... The magnitude of these costs depends on how a tariff affects the prices charged by foreign exporters and the U.S. demand for imported goods. Studies, including our own, have found that the tariffs that the United States imposed in 2018 have had complete passthrough into domestic prices of imports, which means that Chinese exporters did not reduce their prices. Hence, U.S. domestic prices at the border have risen one‑for-one with the tariffs levied in that year. Our study also found that a 10 percent tariff reduced import demand by 43 percent. U.S. purchasers of imports from China must now pay the import tax in addition to the base price. Thus, if a firm (or consumer) is importing goods for $100 a unit from China, a 10 percent tariff will cause the domestic price to rise to $110 per unit. This adds a $10 cost per unit for buyers of imports, but it is not a true cost for the U.S. economy because the money is simply transferred from buyers of imports to government coffers and thus could, in principle, be rebated. Some firms may also reorganize their supply chains in order to purchase their products from other, cheaper sources. For example, the 10 percent tariffs on Chinese imports might cause some firms to switch their sourcing of products from a Chinese firm offering goods for $100 a unit to a less efficient Vietnamese firm offering the product for $109. In this case, the cost to the importer has risen by nine dollars, but there is no offsetting tariff revenue being paid to the government. This tariff-induced shift in supply chains is therefore called a deadweight or efficiency loss. .... As a result of this expenditure switching, we estimate that the annualized deadweight loss increases from $132 to $620 per household, bringing the total annual cost of the new round of tariffs to the typical household to $831. In sum, according to our estimates, these higher tariffs are likely to create large economic distortions and reduce U.S. tariff revenues.
Yeah, we kinda' knew this. This is why the global economy is going to head into recession mode. Domino effect. Trump is the only on who can save us now, which is ironical, because he's the asshole that started this shitstorm avalanche in the first place.
So that tax reform that gave everyone a little tiny bit extra in their weekly pay check has completely vanished thanks to these tariffs! Sweeeet.
It really didn't help that many people. It certainly helped the upper middle class but calling it a "sweet tax reform" is in direct opposition to what basically everyone I know making less than 75,000 experienced last year. On topic, this is in fact how Tariffs work. The problem I've been called anti-trump, anti-america, and anti-republican for is the fact Tariff Man doesn't seem to understand the scope of this project. If we did this 20 years ago we would damage China to the point of capitulation. Today, China controls so much of our west coast real estate, so much of our production, warehousing, and shipping, and so much of our debt we are quite literally slicing our own throats to get back at China hoping they capitulate before we bleed out. The developing world labor market is so cheap right now companies in the states have every incentive to switch production to Vietnam/Cambodia/etc. These are also controlled by China, who will take in tariff-free profits. There's virtually nothing we can do to China short of heavy sanctions, embargos, or war that would dent their blast furnace of an economy. Our only hope is their debt situation gets worse and we can buy back our debt cheap when they go through their own mortgage crisis. The tariffs are just going to be shouldered by consumers who have no better alternative than MegaCorp (TM) goods.
This might all be theoretically true but is not in reality. Currently, almost the entire added cost by tariffs is paid for by importers and NOT passed on to consumers.
So the alternative is doing nothing? Actually the trade tensions work well so far, amazingly well. It takes a few more shuffles and pushes and the catalyst that pops China's debt bubble might just be sufficient to spark an explosion. They definitely feel the impact while US consumers hardly feel a dent because currently almost all tariffs are swallowed by importers and not passed on (Google it if you don't believe me).
have to do something... look up HuaWei's 5G penetration (it's a chinese military company that is about to infiltrate the telecom systems of the west), and Made In China 2025. nobody said it's gonna be pain free for the US.
This is one of the major reasons we should've cut off china years ago. They are an enemy of the way of life of the western world. Why are we allowing them to manufacturer our equipment? I sure hope our next generation fighters aren't running lowest bidder hardware!
well - W was too dumb.. Obama didn't do anything... so we wasted 16 years.. better late than never I guess... still containable.. China will have to come to the table or HuaWei will die.