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U.S. companies are bearing the brunt of Trump’s China tariffs

Story Highlights
  • Most of the elevated tariffs imposed at the peak of the U.S.-China trade war have remained in situ and affect over half all trade flows between the 2 countries, said Moody’s.
  • U.S. importers absorbed quite 90% of additional costs resulting from the 20% U.S. tariff on Chinese goods, the ratings agency said during a report.
  • U.S. exporters also absorbed most of the prices from tariffs imposed by China, consistent with the report.

American companies are bearing the brunt of the increased tariffs imposed at the height of the US-China trade war, according to Moody’s Investors Service. The resulting extra costs are borne by US importers, but the report also says that US exporters bear the most costs from the tariffs imposed by China. American companies, faced with the rising tariffs imposed at the height of a US-China trade war, claim that they are harming not only the US economy but the global economy as a whole.

The resulting additional costs would be borne by U.S. importers, the rating agency said in a report Monday. In the report, Moody’s writes that much of the cost of tariffs has been passed on to US importers. This means that US importers reportedly pay about 18.5% more for the same product, for which Chinese exporters receive 1.5% less. If tariffs remain in place, the pressure on US retailers will increase, leading to a wider transmission of even consumer prices, “the agency added.

Most tariffs have been maintained, and, according to Moody’s, affect only a small part of total US trade with China. US tariffs on Chinese goods averaged 3.1%, while for American products, they averaged 19.3%, averaging 20.7%. Chinese tariffs on American goods averaged 8%, an effect achieved by higher trade tariffs.

US importers are not the only ones affected by the increased tariffs, Moody’s writes in the report that US exporters have also borne most of the costs of the tariffs imposed by China. This is because US exports affected by retaliatory tariffs are products that may come from other countries, such as agricultural products.

Economists and businesses argue that Trump’s tariffs on China are hurting the US economy and will not force China to reverse its unfair trade practices. President Joe Biden has previously said he disagrees with Trump’s approach to China and is ready to “reverse” his predecessor’s policies.

Some observers believe the tariffs could give the US leverage over China, and the administration has indicated that it will be more aggressive in addressing China’s unfair trade practices.

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