Last round of Trump’s tar­iffs al­ready raised con­sumer prices


Pres­i­dent Trump has re­peat­edly pro­claimed that when it comes to tar­iffs on Chi­nese goods, China pays the price.

But it’s U.S. con­sumers who ac­tu­ally pay, if ex­port and im­port firms and man­u­fac­tur­ers choose to pass along the cost. And trade groups and eco­nomic stud­ies show that U.S. con­sumers al­ready are see­ing higher prices on a range of items – lug­gage and ma­jor ap­pli­ances such as wash­ing ma­chines, for in­stance – that were sub­ject to pre­vi­ous tit-for-tat tar­iffs in the es­ca­lat­ing trade bat­tle with China or re­tal­ia­tory tar­iffs from other for­eign coun­tries.

With the Trump ad­min­is­tra­tion’s tar­iff in­crease from 10 per­cent to 25 per­cent on $200 bil­lion in Chi­nese goods an­nounced Fri­day, prices could rise on other goods as well. China re­tal­i­ated Mon­day with tar­iffs rang­ing from 5 per­cent to 25 per­cent on $60 bil­lion of U.S. goods.

The tar­iffs so far ap­pear to have had a mod­est im­pact on over­all in­fla­tion. The U.S. con­sumer price in­dex for the 12 months that ended in April, ex­clud­ing the volatile food and en­ergy sec­tors, rose 2.1 per­cent, ac­cord­ing to the Bureau of La­bor Statis­tics. That was lit­tle changed from the prior four months, when the CPI showed trail­ing 12-month in­creases of 2.0 per­cent to 2.2 per­cent.

How­ever, Gold­man Sachs an­a­lysts said in a re­port that when they grouped to­gether nine of the CPI prod­uct cat­e­gories af­fected by the tar­iffs so far, in­clud­ing laun­dry and other ap­pli­ances, fur­ni­ture and auto parts, it showed those con­sumer prices in­creased “much more” than other core goods prices in the CPI.

When the ad­di­tional tar­iff costs con­sumers paid in the lat­ter part of last year are an­nu­al­ized, the cost per house­hold is about $419, said David We­in­stein, a pro­fes­sor of eco­nom­ics at Columbia Univer­sity who coau­thored a work­ing pa­per re­leased by Lon­don’s Cen­tre for Eco­nomic Pol­icy Re­search on the ef­fect of the Trump ad­min­is­tra­tion’s 2018 trade pol­icy on U.S. prices.

If the ad­di­tional tar­iffs an­nounced by the Trump ad­min­is­tra­tion last week are im­ple­mented and stay in place for a year, that an­nu­al­ized con­sumer cost is likely to dou­ble, We­in­stein said.

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