US consumers pay the price for Trump's tariff policy, economists

Lin Yifu, who is a senior professor at Peking University speaks at an academic forum in Beijing on May 22, 2019.[Photo:China Plus]

Researchers are warning that American consumers and businesses will bear the brunt of the decision by the Trump administration to raise tariffs on billions of dollars of imports from China.

American consumers are paying the price for the Trump administration's rising tariffs, as their cost of living is pushed up by higher taxes on imports from China.

That's according to Lin Yifu, who is a senior professor at Peking University.

"The products that are imported from China are not manufactured by the United States itself. These imported products are comparatively cheaper, and are good quality. For example, some products like apparel and shoes which are made in China are much cheaper for American consumers than those made by local manufacturers in the United States."

A report by the U.S.-China Business Council shows that trade between China and the United States saves the average American family 850 dollars a year, accounting for nearly 2 percent of the average income of an American family.

Zhou Shijian, a senior researcher at Tsinghua University, says American consumers will suffer, as products made in China have become a ubiquitous part of their daily life.

"The most attractive parts about Chinese products are their price and their quality. 86 percent of the toys imported by the United States come from China. And over 60 percent of imported bags and shoes are made in China. The United States relies heavily on consumer goods made in China, and they can hardly find alternatives."

U.S. President Donald Trump has slapped import tariffs on hundreds of billions of dollars of goods from China.

The tariff hikes impact on the price of thousands of items, including consumer goods like furniture, toys, and handbags.

Businesses have also been hit, paying more for chemicals, telecommunications equipment, and plastics.

Some experts have warned that the rising duties on imports from China will lead to higher shelf prices, as businesses choose to pass on the extra cost to consumers.

Despite President Trump's assertion that China is paying the price of the ongoing trade war, earlier this month, the world's biggest retailer, Walmart, warned of higher prices for American shoppers as higher tariffs were imposed on imports from China. Macy's department store has issued a similar warning.

Experts point to a lack of domestic savings and growing fiscal deficits as being the cause of America's trade deficits with China.

Others have said that President Trump has disrupted trade, hurt manufacturing, rattled international markets, and slowed the global economy, pointing to his decision to hike tariffs on goods from China, Canada, and some European countries.

Professor Lin Yifu says the measures have not only failed to reverse America's lopsided trade balance, and have instead raised the cost of living burden for America's families.

"Data from 2018 showed that despite huge tariff hikes by the Trump administration, the United States' trade deficit increased by over 12 percent and its trade deficit against China also increased nearly 12 percent. The move weakened global trade. American citizens and businesses that use Chinese products are the one's paying the price. Under these circumstances, the welfare of average American families is reduced when they pay more for imported goods. The rising costs will also harm the job market."

China has become the largest trading partner for more than 120 countries. Some analysts say that the demand of Chinese consumers for premium products will drive up imports and growth opportunities for global investors.