New Trump tariffs double costs to consumers, lower tax revenue, study shows
President Trump’s latest tariff increases on Chinese imports brought the annual cost of his tariffs to $831 per household, according to a study on the New York Federal Reserve’s blog.
The study by Mary Amiti, Stephen J. Redding, and David E. Weinstein found Trump’s decision to increase tariffs on $200 billion of Chinese imports from 10 percent to 25 percent doubles the cost to American households compared to all his previous tariffs.
{mosads}The increased cost to consumers amounts to $106 billion a year.
But the higher tariffs could actually lead to a drop in revenue for the Treasury Department, because the price increase is large enough to push consumers to buy alternative offerings from countries such as Vietnam.
“According to our estimates, these higher tariffs are likely to create large economic distortions and reduce U.S. tariff revenues,” the authors concluded.
The study, on a blog the New York Fed notes does “not necessarily reflect the position of the New York Fed,” flies in the face of Trump’s assertions that the tariffs barely affect U.S. consumers, and that China picks up the tab for increased costs.
It does not take into account the effects of retaliatory tariffs by China or other U.S. trade partners.
Trump has also threatened to impose new tariffs on an additional $300 billion worth of Chinese imports if the two countries fail to reach a trade deal, a prospect that has seemed to dim in recent weeks with stalled negotiations and an uptick of rhetoric by Chinese leadership in state-run media digging into its negotiating positions.
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