U.S. Consumers Have Borne the Brunt of the Current Trade War
The National Bureau of Economic Research has highlighted two studies. (hat tip Spencer England)
U.S. Consumers Have Borne the Brunt of the Current Trade War
Recent tariff increases are unprecedented in the post-World War II era in terms of breadth, magnitude, and the sizes of the countries involved.
In 2018, the United States imposed tariffs on a variety of imported goods, and other countries responded with tariffs on imports from America. Two new NBER working papers analyze how this “trade war” has affected U.S. households and firms.
The recent tariffs, which represent the most comprehensive protectionist U.S. trade policy since the 1930 Smoot-Hawley Act and 1971 tariff actions, ranged from 10 to 50 percent on about $300 billion of U.S. imports — about 13 percent of the total. Other countries responded with similar tariffs on about $100 billion worth of U.S. exports.
In The Impact of the 2018 Trade War on U.S. Prices and Welfare (NBER Working Paper No. 25672), Mary Amiti, Stephen J. Redding, and David Weinstein find that the costs of the new tariff structure were largely passed through as increases in U.S. prices, affecting domestic consumers and producers who buy imported goods rather than foreign exporters.
…
Pablo D. Fajgelbaum, Pinelopi K. Goldberg,Patrick J. Kennedy, and Amit K. Khandelwaladopt a different methodological approach to address the welfare effect of recent tariffs. They also find complete pass-through of U.S. tariffs to import prices. In The Return to Protectionism (NBER Working Paper No. 25638), they estimate that the new tariff regime reduced U.S. imports by 32 percent, and that retaliatory tariffs from other countries resulted in an 11 percent decline of U.S. exports.
I wonder how much anyone is noticing the higher prices. The big ticket items like food, housing and medical care are produced domestically. Energy is increasingly produced domestically as well. Those are the big ticket items. One problem is that Chinese imports were a lot cheaper than domestically produced goods, so there is room for higher prices. Will anyone even notice a 50 cent increase in the cost of a $5 tee shirt?
Kalesberg:
I usually do not buy $5 Tee Shirts. They are usually $10 and up at Costco or Amazon. You can find cheaper ones. Did you mean 50%?
Small taxes as they are. You need something larger to produce a noticeable effect.
El año pasado, Trump implemento Aranceles con la idea de proteger a la economía de Estados Unidos, y con el pretexto de que se habían aprovechado de su país lo suficiente. El problema es que éstos aranceles no lograron hacer que la economía americana parara de importar productos, y ya que tenían que pagar una tarifa al importarlo, esto se reflejaba en un precio más alto para el consumidor. Esto es un ejemplo perfecto de porque generalmente no funciona cuando el gobierno interviene en la economía, ya que el precio más grande generalmente lo va a parar pagando la gente común y corriente.
Translation: “Last year, Trump implemented Tariffs with the idea of protecting the US economy, and on the pretext that they had taken advantage of their country enough. The problem is that these tariffs did not manage to make the American economy stop importing products, and since they had to pay a fee when importing it, This was reflected in a higher price for the consumer. This is a perfect example of why it generally does not work when the government intervenes in the economy, since the bigger price is usually going to stop paying ordinary people”. Valeria, Universidad Francisco Marroquín
Valeria: I believe I have translated properly? Si?