A new report released on Monday by Moody’s Investors Service found that most of the cost burden from President Trump’s China tariffs — which are still in effect — has been absorbed by US companies.
Moody’s said US importers absorbed more than 90 percent of the costs affiliated with the 20 percent US tariff on Chinese goods. The report found that US importers pay an additional 18.5 percent for a Chinese product subject to the 20 percent tariff, while the Chinese exporters receive only 1.5 percent less.
The cost for importers is passed onto the US consumer. Moody’s said if the tariffs remain in place, “pressure on US retailers will likely rise, leading to a greater pass-through to consumer prices.”
US exporters are also hurting much more than their Chinese counterparts due to China’s retaliatory tariffs. “US exporters, unlike China’s exporters, lowered by roughly 50 percent the prices of goods affected by foreign retaliatory tariffs, carrying a much higher cost burden than foreign importers of goods under US tariffs,” the report says.
The big hit to US exporters is due to the fact that many of the US goods China buys are agricultural products that can be sourced elsewhere.
So far, President Biden has not lifted Trump’s China tariffs, and his trade officials have suggested that they might be here to stay. Commerce Secretary Gina Raimondo has praised the tariffs, describing them as “effective.”
“Let me say, those tariffs have been effective. The data show that those tariffs have been effective, and I think what President Biden has said is we’re going to have a whole of government review of all of these policies and decide what it makes sense to maintain,” Raimondo said in March.