US consumers will feel pain of tariff war more than Chinese

Trump targeting $200b of imports from Beijing could hit at the heart of the American household

The trade fight between the world’s two economic titans is about to make dozens of household goods more expensive for US shoppers, but thousands of miles away in China, consumers look set to escape much of the pain.

US President Donald Trump is said to be intending to pull the trigger on tariffs targeting $200 billion (Dh735 billion) of Chinese imports.

Such a move — his biggest salvo in the fight with China so far — hits at the heart of the American household, risking price increases for everyday items from refrigerators and freezers to cutlery and towels.

China’s imports of US-made goods are dwarfed by what it exports. The country’s counterpunch tariffs on $60 billion of imports from the US focus on manufacturing components, chemicals and medical instruments. And many of the readyto-buy American goods that will be subject to duties by the Chinese government are hardly mass-market: Yachts, riding crops and false beards.

“Mostly, it’s going to be absorbed by Chinese corporates instead of consumers,” said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd. “At the bottom line, the direct impact is very small.”

US imports from China were about $505 billion in 2017, much of it electronic goods, household furnishings and clothing. Only $130 billion of products, including soybeans, aircraft, machinery and plastics went the other way, reflecting China’s role as a manufacturing base, US figures show.

New data out Wednesday showed the US goods deficit with China in the seven months through July this year widened about 8 per cent to $234 billion from the same period in 2017.

China’s plans for tariffs on $60 billion of US goods includes an additional 5 per cent on US products including planes and dairy machinery, and another 10 per cent on items including wigs and textiles. There’s an extra 20 per cent on some chemicals and paper, and an additional 25 per cent on products such as meat and wheat.

But beyond these tariffs, China can’t match Trump’s threats dollar for dollar. The government would have to retaliate in other ways, such as increased regulation of US companies in China — measures that don’t directly put the consumer in the firing line.