by The US consumer may end up being subject to a de facto ‘tax’ as the scope for finding alternative suppliers is limited.Last week, the Trump administration said it would add USD200 billion of Chinese imports to its tariff net, possibly taking effect as soon as September. These tariffs come on top of the tariffs on USD50 billion of Chinese goods already announced (of which USD34 billion already kicked in early July). By way of comparison, the US imported USD506 billion worth of merchandise from China in 2017.The US has contended that the harm to domestic consumers is minimal, but this claim is becoming more difficult to sustain as tariffs widen to cover roughly half of all imports from China.Importantly, China dominates many US supply chains. In fact, China is the dominant supplier in the
Topics:
Thomas Costerg considers the following as important: Macroview, US Chart of the week
This could be interesting, too:
Cesar Perez Ruiz writes Weekly View – Big Splits
Cesar Perez Ruiz writes Weekly View – Central Bank Halloween
Cesar Perez Ruiz writes Weekly View – Widening bottlenecks
Cesar Perez Ruiz writes Weekly View – Debt ceiling deadline postponed
The US consumer may end up being subject to a de facto ‘tax’ as the scope for finding alternative suppliers is limited.
Last week, the Trump administration said it would add USD200 billion of Chinese imports to its tariff net, possibly taking effect as soon as September. These tariffs come on top of the tariffs on USD50 billion of Chinese goods already announced (of which USD34 billion already kicked in early July). By way of comparison, the US imported USD506 billion worth of merchandise from China in 2017.
The US has contended that the harm to domestic consumers is minimal, but this claim is becoming more difficult to sustain as tariffs widen to cover roughly half of all imports from China.
Importantly, China dominates many US supply chains. In fact, China is the dominant supplier in the top import categories (telecom equipment, computers, toys, furniture, computer parts, footwear, electrical machinery), and in most cases dwarfs the second-largest supplier (see chart).
For instance, USD83 billion of telecom equipment (classification code SITC 764), is imported from China, dwarfing the USD14 billion imported from Mexico and USD6 billion from South Korea. It is the same story for computers (classification code SITC 752), the second-biggest category: The US imports USD50 billion of computer equipment from China, well ahead of imports from Mexico (USD20 billion) and Thailand (USD4 billion).
In conclusion, US importers, but particularly US consumers (since many of these goods are consumer oriented), could end up being subject to a de facto ‘tax’ as the scope for finding alternative sources of supply is limited.
