Import tariffs placed on more than USD300 billion worth of Chinese goods during the Trump administration increased U.S. prices, according to a report from the bipartisan U.S. International Trade Commission (USITC), confirming a widely held view among analysts that the tariffs caused “self-inflicted harm”. The USITC, which investigated the impact of the U.S.-China trade war on America’s economy, said that prices for imports from China across some of the most affected industries – such as computer equipment, semiconductors, furniture, and audio and video equipment – rose by as much as 25% in 2021. The tariffs were imposed in 2018 and 2019, adding 7.5% to 25% import taxes on Chinese goods, leading to the prices of U.S.-produced goods in some industries increasing by 3% to 4%, the report said.
“They haven’t pushed China to alter its underlying economic model, nor to address many of the structural impediments to business that foreign firms face in the Chinese market,” said Nick Marro, Lead Analyst in global trade with The Economist Intelligence Unit (EIU). “If anything, we’re seeing China double down on those policies now, given the pressure from U.S. export controls.” The “Economic Impact of Section 232 and 301 Tariffs on U.S. Industries” report came in response to a directive from the U.S. Congress as part of a law passed last year. The tariffs may have helped to spur multinational corporations into supply-chain diversification and to expand their presence in countries such as Vietnam and Malaysia, he added, but Washington has not achieved its core goal from the trade war. Imports of the affected goods from China decreased from USD311 billion in 2017 to around USD265 billion in 2021, the report added. “The actual impact is not on the importer nor even the foreign exporter,” said Jayant Menon, Senior Fellow at the ISEAS-Yusof Ishak Institute in Singapore. Tariffs are eventually paid by the final consumer or the producer that actually buys products.
Also in 2018, the Trump administration passed section 232 of the Trade Expansion Act of 1962, imposing duties on steel and aluminum imports, on the grounds of protecting national interests. The USITC found that, under section 232, imports of steel products were reduced by 24%, raising U.S. prices by 2.4% and increasing domestic output by 1.9%. Aluminum imports also fell by 31%, while prices in the U.S. rose by 1.6%, and local production grew 3.6%, the report added. “This is why tariffs are seen as a relatively blunt policy measure, given that they cause self-inflicted harm when they’re imposed,” Marro added.
USITC Commissioner Jason Kearns added that “the report does not describe where we have been or where we are going in our trade relations with China.” “It is a shame the ITC report intentionally limited the scope and excluded a broader, economy-wide assessment of the tariffs, as it remains questionable whether the tariffs produced a net benefit to the U.S. economy,” concluded Bryan Mercurio, Law Professor at the Chinese University of Hong Kong. The administration of Joe Biden has maintained Trump’s trade-restrictions on imports of Chinese goods and is currently reviewing whether the tariffs should continue, the South China Morning Post reports.
