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What the Trade War With China Will Cost You, According to the New York Federal Reserve

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24.05.2019

Farmers in the American heartland and owners of Huawei smartphones have good cause to worry about the ongoing trade war with China. But what about the rest of us? Will the 25 percent tariffs on many imported Chinese goods, imposed by president Donald Trump after trade negotiations broke down, have any effect at all on ordinary Americans?

The Federal Reserve Bank of New York has crunched the numbers and come up with an answer: It calculates that the trade war will cost every U.S. household $831 a year.

How did they reach this conclusion? In part, by observing how the earlier tariffs of 10 percent, imposed last year, played out. The New York Fed's analysis shows that those tariffs did not cause Chinese exporters to lower their prices at all. In other words, importers who buy Chinese goods are still paying the same prices for those goods that they always have, plus the 10 percent tariffs. And they have passed those higher costs on to consumers in the form of higher prices. "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," writes Mary........

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