How big a deal is the trade war with China for American consumers? Big, and potentially getting bigger.
U.S. merchandise imports from China totaled $539.5 billion last year, according to the Office of the U.S. Trade Representative. In the past year, the U.S. has imposed tariffs of 25% on $250 billion of these goods, and the White House has been preparing to roughly double the reach of these tariffs to cover virtually all goods from China. China has already retaliated with tariffs on $110 billion of U.S. exports.
So what exactly are we importing? Everything from plastic cups and comforters to car motors and tables.
This back-and-forth tariff tag is hurting both consumers and American businesses. The latest round of U.S. tariffs, which were implemented in May, applied to imports from China cost the average American household $500 according to Katheryn Russ, an economics professor at the University of California at Davis. Additionally, the threatened expansion of tariffs to cover virtually all goods from China could cost the average American family of four more than $2,000 annually.
Manufacturers, farmers, and technology companies will all take a revenue hit as costs on commonly used products and materials rise – risking a decrease in the U.S.’ recent economic resurgence.
To show just how many goods American consumers might have to pay more for if another round of tariffs is implemented, the top U.S. imports from China are listed below.
|Top Import Categories From China: |
Common Products Americans Buy in Those Import Categories:
Transformers, Generators, Motors
Drill press, Hobbing (gear cutting) machine, Gear shaper, Broaching (metal cutting) machine
Furniture & Bedding
Comforters, Pillows, Sheets, Couches, Tables, Chairs, Picture Frames, Bookshelves, Lamps, Textiles
Toys & Sports Equipment
Balls, Dolls, Toy trucks, Action figures
Computer parts, Cell phone parts, Toys
Tariffs are a tax on Americans, not on foreigners, and studies show Americans are indeed bearing the overwhelming majority of these costs.
The unpredictability of tariffs is causing concern across the U.S. business community as well. In fact, since the beginning of the year, more than a quarter of earnings calls by Fortune 500 companies have mentioned the impact of tariffs, according to analysis conducted by the U.S. Chamber of Commerce. The research found that retailers and manufacturing and industrials were the sectors most likely to discuss the impact of tariffs on business performance. More than half of retail earnings calls (61%) discussed tariffs and nearly half of all manufacturing and industrials earning calls (47%) mentioned them.
Comments surrounding tariffs on the earnings calls had the following broad themes: financial pressure, supply chain disruption, uncertainty, delayed transactions and pass-through costs to consumers.
What does this mean for Americans? If the earnings calls are any guide, these increased costs from tariffs will almost certainly result in Americans paying more at the checkout counter for a wide range of items.