Last week the US Trade Representative published a 4-year review of the tariffs levied on China by Donald Trump and continued by Joe Biden. There are a few things of note. First of all, imports from China that were subject to tariffs did indeed fall:
As you can see, import of products from China that were subject to tariffs dropped by 30-40%, while products not subject to tariffs increased about 20%. Much of the drop in Chinese imports was made up via imports from other countries, leading to an increase of 40% in imports from elsewhere in the world.
Second, tariffs increased the average US price for the affected products:
Other effects noted in the report:
- Neither employment nor wages in US manufacturing increased, probably because most of the drop in Chinese imports was made up by increased imports from Taiwan, South Korea, and other countries.
- Tariffs pushed China to steal or forcibly transfer US technology slightly less than before, but only slightly.
- US companies are increasingly moving production out of China.
- The impact of tariffs on China's economy is fuzzy, but probably on the order of ½-1% of GDP.
- Chinese suppliers did not reduce prices in response to tariffs. The full cost of the tariffs was borne by US consumers.
So that's that. Tariffs increased some prices in the US but didn't increase manufacturing and probably had only a modest effect on China's economy. This shouldn't come as a surprise. As big as China is, imports from China still make up only about 1% of US GDP. The effect of the China tariffs is sizeable in a few very specific industries and geographic areas, but that's about all.
I wonder if GM gets a pass on the tariffs for its made in China Envision model? Two other Buicks are made in Korea. Not that there's anything wrong with that.
Unless you are an US auto worker.
Given the current low US unemployment rate, I don't think autoworkers or any other workers are suffering from lack of jobs. Right now, it would be very difficult to "onshore" any significant amount of manufacturing because it would be very difficult to find the needed workers.
Seems like tariffs are an economic loser, consistent with economic theory, and a political winner, consistent with the actions of both Trump and Biden.
I kinda agree but anything that takes away money from China is OK by me.
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The tariffs are taking money away from American consumers.
Yabbut [red-faced, throbbing forehead vein, bulging neck tendons] JY-na! something something, ergo USA wooooo!!!
Can't imagine we'd be hearing the same thing from MAGA world if it were Russia instead, just sayin'.
My guess is that US companies are leaving China because of what many observers (myself included) think is the certainty of an invasion of Taiwan and consequent massive disruption of world trade and the potential for nuclear war between the West and China. This is one of the great downsides of an autocratic government with a strongman ruler who is determined to impose himself upon others regardless of the cost to his own country.
I think that Xi Jinping is waiting to see if Putin is successful in his conquest of Ukraine and elsewhere in the former Soviet empire. If he is, the Xi will launch an invasion.
+1
"US companies are increasingly moving production out of China."
This reason alone makes tariffs worth it. Given how increasingly belligerent China has become, having our supply chain so completely dependent on them was a ticking time bomb.
Here is a long, but worthwhile, read on the effectiveness of tariffs.
https://www.financialsense.com/michael-pettis/tariffs-and-trade-intervention
Here's a teaser and a summary, and a suggestion for better approach than tariffs:
https://taxjustice.net/2019/08/21/taxing-foreign-capital-as-an-alternative-to-tariffs/
Thanks for the suggestion, I feel like most analyses of trade imbalances are either completely ignorant or have an axe to grind.
The effect of the China tariffs is sizeable in a few very specific industries and geographic areas, but that's about all.
Also, politics.