Impact of Tariffs on China: Greater Economic Consequences for the U.S.
Recent studies suggest that tariffs imposed by President Trump on Chinese imports could negatively affect the U.S. economy more than expected. Economists point out discrepancies between U.S. and Chinese import data, which may result in larger consequences for U.S. consumers if the de minimis import exemption is eliminated. The impact of tariffs is set to escalate as imports from China remain more substantial than initially reported.
Recent research indicates that President Donald Trump’s tariffs on imports from China may have a more significant negative impact on the U.S. economy than official trade statistics suggest. Economists from the Federal Reserve Bank of New York warn that the potential economic consequences could worsen if the administration eliminates the preferential treatment for de minimis imports, valued at under $800. As warned by Hunter L. Clark, a researcher at the New York Fed, “U.S. imports from China have decreased by much less than has been reported in official U.S. statistics.”
Data from U.S. sources indicate a decline in imports from China, reducing its share of total imports from 21.6% in 2018 to 13.4% in 2024, equating to a nominal decrease of $66 billion. Conversely, Chinese statistics suggest a minimal decline of only 2.5 percentage points in market share while showing an increase in nominal exports to $524 billion. As Clark articulated, “Simply stated, the U.S. is saying it buys from China a lot less than what China says it is selling.”
The possible elimination of the de minimis exemption, which was raised from $200 to $800 in 2016, could exacerbate the impact of tariffs. This increase led to remarkable growth in direct-to-consumer imports, significantly contributing to the discrepancy in trade data. Since his return, President Trump has implemented a new 10% tariff on Chinese goods, along with a proposal to cut tariff exemptions for low-value imports.
The discrepancy in import statistics is evident, with data suggesting that de minimis imports from China may have increased by over 50% last year, exceeding $50 billion. Clark noted that this growth means that consumers in the U.S. could face more severe repercussions from the recent tariff increases, particularly if Chinese suppliers do not lower their prices to absorb tariff costs.
In conclusion, the research from the Federal Reserve Bank of New York highlights the potential for greater economic repercussions from tariffs on China than previously recognized. The disparity between U.S. and Chinese import data raises concerns about measuring the true impact of these tariffs. The potential removal of the de minimis exemption further complicates the situation, leading to possible increased costs for American consumers.
Original Source: www.ttnews.com
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