Source: Jon Dougherty
(NationalSentinel) President Donald Trump justified his administration’s newest round of tariffs on hundreds of billions of dollars’ worth of Chinese imports, explaining that their companies, not American consumers, are paying the cost of them.
“It was brought out very strongly today by a number of great economists that, because China has devalued their currency so much, that, in fact, they are actually paying for all of the tariffs,” the president said on Sunday.
He noted that China’s currency devaluations offset price increases in the United States, which ends up helping U.S. consumers.
The latest round of tariffs are mostly aimed at consumer goods and are part of the administration’s ongoing efforts to level the trade playing field between the world’s two biggest economies.
The administration began imposing 15 percent tariffs on $112 billion worth of Chinese imports. The tariffs hit a wide range of consumer goods including clothing, boots, furniture, electronics, watches, diapers, milk, and chocolate, The Epoch Times reports.
The new tariffs affect 87 percent of all clothes and home textile imports and 52 percent of all footwear imports from China. (Related: Trump admin to provide $16 billion in aid to America’s farmers amid ongoing China ‘trade war’)
Earlier, the administration imposed 25 percent tariffs on $250 billion worth of Chinese imports. Those focused primarily on machinery and industrial equipment.
It’s possible, however, that due to the latest round focusing on consumer goods that Americans will eventually see some cost increases. A recent study by J.P. Morgan found that Americans could pay an average of $1,000 more for goods per year. Meanwhile, The Epoch Times said that a Federal Reserve Bank of New York study in May estimated that Americans would only pay around $831 more per year in higher costs.
But others believe the overall cost impact of the tariffs on U.S. consumers would be minimal. Some companies and distributors have said they won’t raise their prices unless they absolutely have to.
And other economists have said that overall, the impact of tariffs on U.S. inflation rates would be muted.
The Wall Street Journal recently noted that these economists believe increased tariffs on Chinese goods will amount to a drop in the bucket in the $21 trillion U.S. economy.
Meanwhile, China has imposed additional tariffs of 5 percent and 10 percent on several American imports including soybeans and crude oil. “These extra tariffs were levied on 1,717 items of a total of 5,078 U.S. products. Beijing is expected to impose additional tariffs on the remaining items in December,” The Epoch Times reported.
Still, the president remains confident that trade talks with China will proceed at some point this month.
“The meeting is still on, as you know, in September. That hasn’t changed. They haven’t changed and we haven’t. We’ll see what happens,” he said.
“But we can’t allow China to rip us off anymore as a country.” (Related: Trump sounds positive note on China trade talks: ‘I don’t think they have a choice’)
Long term, the tariff regime used by the Trump administration is likely to shift production away from/out of China. Already, according to a survey released last month by the U.S.-China Business Council, 17 percent of American companies operating in China said they have either reduced or ended planned investments in China this year.
Also, companies are beginning to shift their production facilities out of China to neighboring Asian nations such as Vietnam and Taiwan in order to avoid the tariffs. Thirteen percent of American companies said they have either moved, or are planning to move, operations out of China, the survey found — all of which hurt Chinese GDP and result in job losses.
“A lot of companies have left China, and a lot more are leaving. And they are not doing well. They are having the worst year they’ve had, I understand, in 61 years,” the president said last week.
It’s not just U.S. companies, either. Japanese firms are also beginning to move production facilities out of China to avoid the tariffs.