USA TODAY International Edition
Our view: Tariffs on China will hit you in your pocketbook
President Donald Trump says his latest trade gambit — 10 percent tariffs set to go into effect today on $200 billion of annual imports from China — will force Beijing to negotiate better terms. That might or might not prove true. One thing is certain: These tariffs, on top of a previous round affecting $50 billion in imports, will hit American consumers in the pocketbook. A tariff is essentially a sales tax on merchandise from a certain country. It is imposed at the port of entry and paid by the importer — a retail chain or a wholesaler, perhaps — and is then passed along to the consumer. As such, it is among the more regressive taxes. A multimillionaire buying a toy as a Christmas gift pays the same amount extra as someone of more modest means making the same purchase. The exact cost to consumers of each tariff is hard to pin down because retailers might eat some losses in the short term to maintain market share. But ballpark figures look ominous. A Consumer Technology Association study estimated that tariffs on printed circuit assemblies and connected devices would add 3.2-6.2 percent to the price of consumer electronics. Other products, including appliances, furniture and clothes, would face similar levies. Things could get even worse because tariffs have a way of leading to other tariffs, as well as Chinese retaliation against U.S. exporters. The administration has already had to bail out soybean farmers caught in Trump’s trade war. And he is said to be considering a tariff on imported cars because his levies on steel and aluminum have made domestic automakers less competitive. If that happens, consumers will pay a whopping $5,000 per vehicle. To be sure, there are good reasons to get tougher with China. It exports more than $500 billion annually to the USA while importing about $130 billion. American companies operating in China, moreover, face daunting obstacles and an uneven playing field. In many cases, they are required to share trade secrets in return for being allowed to do business. And many also find themselves competing with companies that are owned wholly or in part by the Chinese government and get special treatment from regulators. Even so, the China tariffs, which affect half of all goods coming in from the country, are overly broad. What’s more, Trump has not identified any tangible objectives from his trade policy other than to placate protectionist forces at home. It would be better to impose more targeted sanctions while telling the Chinese exactly what Washington expects them to do for relief. This — combined with getting back on board with the Trans-Pacific Partnership, a scuttled trade agreement that would have left China on the outside looking in — would put real pressure on Beijing to change its ways without turning American consumers into collateral damage.