Americans, not Chinese, pay Trump tariffs: NY Fed study

[babylonsister]

I know. D'uh.


November 25, 2019 / 2:17 PM / Updated a day ago
Americans, not Chinese, pay Trump tariffs: NY Fed study
Howard Schneider



WASHINGTON (Reuters) - When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost - implying Chinese firms would have to cut their prices to absorb import “taxes” of up to 25% when the goods hit U.S. shores.

Instead, the prices Chinese firms charge have barely budged, meaning U.S. companies and consumers are paying the tariff costs, estimated at around $40 billion annually, New York Fed Reserve Bank researchers found in a study released on Monday.

As a result of the U.S.-China trade war, U.S. Customs and Border Protection adds as much as 25% to the import price as Chinese goods enter the country. If Chinese companies were absorbing that cost, they would have to cut their prices as much as 20% - a level that would allow U.S. retailers, manufacturers, or wholesalers to keep their own prices and profits stable.

That is not what is happening.

Import data from June 2018 to September 2019 shows Chinese import prices fell only 2%, the Fed study found, in line with price declines seen in many other nations as global trade slowed.

“The continued stability of import prices for goods from China means U.S. firms and consumers have to pay the tariff,” the Fed research team wrote.

The researchers did not estimate how those costs were split between lower profits for U.S. companies or higher consumer prices.

The research did find, however, that China is feeling the impact of higher tariffs.

more...

https://www.reuters.com/article/us-usa-fed-tariffs/americans-not-chinese-pay-trump-tariffs-ny-fed-study-idUSKBN1XZ2A4

[Turbineguy]

1. Conservative economic thought always

includes magic.

[dalton99a]

2. A surprise finding

Last edited Tue Nov 26, 2019, 09:09 PM - Edit history (1)

[Igel]

6. No, there were three options.

1. Chinese prices drop as they pay the difference between market price and tariffs.

2. They lose market share. That means they lose business and profit. They "pay" but not to the US government. This has happened, a 2-6% drop in sales. It's a bad thing for China. "Pay" does not necessarily always mean with legal tender.

3. They manipulate their currency. The pay in yuan may not change, but by devaluing everything in the country the net effect is to make everything imported and purchased in US$ more expensive. Then US producers have a choice--they can cut *their* prices or reduce *their* market share. Since we sell less in China than they sell here--thanks to a lot of tariffs that date back many, many years, plus Chinese jingoistic xenophobia that we'd call "racism" if they were white--that doesn't hurt them as much as you'd think. But it does tend to hurt the government, which loses $.

Note that the US has more trouble devaluing its currency because it's not a totalitarian state.

[MichMan]

3. No different than any other kind of tax

Tariffs, Excise and Corporate income taxes are nearly always passed along to consumers.

[babylonsister]

4. But that's not how it was advertised. nt

[moondust]

5. Dumpy still thinks it's 1970.

Tariffs could be used as a tool to increase the price of and thus discourage buying foreign-made products back before Reagan and globalization; back when "American" products were still "Made in USA," "German" cars were still "Made in Germany," etc. Those days are long gone. Just ask Tim Apple.