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Independent Study Confirms Americans Paying For Trade War, Not Chinese

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Published on: November 27, 2019

Yet another independent study has confirmed what we warned about from the beginning: Americans are paying for the trade war, not the Chinese. We can argue semantics all day, but the fact has always been that the American consumer is paying for Donald Trump’s tariffs.

Unfortunately, anyone with even a basic knowledge of economics could see that this is the outcome.

“China is paying us tremendous — and they’re paying for it,” Trump said at a Cabinet meeting last week. “Those tariffs are not paid by us. Those tariffs are paid because they’re devaluing their currency and pouring cash into their economy.”  However, Trump is incorrect on this one. The White House has continued to assert that claim even after the same conclusion was reached in several other major independent studies, including from Princeton, Yale and the University of Chicago, according to a report by Business Insider

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United States businesses have also shouldered the burden of the tariffs, but are much more likely to be able to absorb some of the costs than the average American consumer who was already living paycheck to paycheck.

Financial Experts Warn: Americans WILL Pay The Cost Of A Trade War

The New York Federal Reserve said Monday that it has been proven that the costs of a trade war are for American businesses and consumers to bear. The central bank found in a new study that Chinese businesses have not significantly lowered prices on exports to the US in response to the trade dispute that began in early 2018. That signaled that Americans have instead had to absorb additional import taxes levied by the Trump administration, estimated at around $40 billion annually.

“The continued stability of import prices for goods from China means US firms and consumers have to pay the tariff tax,” Fed economists Matthew Higgins, Thomas Klitgaard, and Michael Nattinger wrote in the study.

But the New York Fed said its findings suggested Chinese firms have not used exchange rates to maintain competitiveness through lower prices.

“Instead, they’ve accepted the loss in competitiveness in the US market and have used the weaker currency to pad profits on each unit of sales,” Higgins, Klitgaard, and Nattinger wrote.  -Business Insider

Whether it is in the form of higher prices, lost jobs, or fewer profits, American businesses and consumers have paid for the tariffs on imported Chinese goods.

Article posted with permission from Mac Slavo

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