US tariffs on Chinese imports to cost American households US$831 a year, says research
- Research published by the New York Federal Reserve Bank follows decision to raise duties on US$200 billion in Chinese goods from 10 per cent to 25 per cent
- US President Donald Trump is facing growing political pressure over the trade war with China despite assurances from US Treasury Secretary Steven Mnuchin
The latest round of US tariffs on Chinese imports will cost the typical American household US$831 a year, according to researchers, as the Trump administration faces growing political pressure over its trade war with China.
Washington this month increased existing tariffs on US$200 billion in Chinese goods from 10 per cent to 25 per cent, prompting Beijing to retaliate with its own levies on US imports, as talks to end a 10-month trade war between the world’s two largest economies stalled.
Research published by the New York Federal Reserve Bank estimated that as tariffs grow larger, importers have more of an incentive to switch to goods from more expensive countries. That could end up reducing the revenue the US is able to collect from its tariffs on Chinese goods, the authors of the report wrote.
While many economists expect the tariffs will push US consumer prices higher, US Treasury Secretary Steven Mnuchin told lawmakers this week that rising tariffs on Chinese imports will not lead to significant cost increases for US families.
A US lawmaker from Iowa, one of the states considered especially vulnerable to the US-China trade war, pressed Mnuchin on Thursday to explain his views.
“It appears beyond evident that consumers will pay this price,” Representative Cindy Axne, a Democrat, said in a letter a day after Mnuchin appeared before the House of Representatives’ Financial Services Committee.
Axne also asked Mnuchin to share the Treasury’s internal research on how the tariffs could affect consumer prices.
Mnuchin has said some companies will source products from countries other than China, potentially shielding US consumers from price increases, and that currency effects, reduction in profit margins and other factors would also mitigate the impact of prices.
