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Anti-China tariffs to cost every U.S. family 850 dollars yearly: Oxford Economics
Last Updated: 2018-08-17 11:27 | Xinhua
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by John Ross

The U.S. tariffs against China pose every American family with a stark choice: do they want to pay 850 dollars a year to the U.S. tax authorities, to carry out a trade war against China, or do they want to spend that 850 dollars on their own household?

The reason of the choice is really that simple as analysed by the company Oxford Economics.

In the comprehensive study "Understanding the U.S.-China Trade Relationship", it found: "Chinese manufacturing... lowered prices in the United States for consumer goods, dampening inflation and putting more money in American wallets."

It said, "At an aggregate level, U.S. consumer prices are 1 percent -- 1.5 percent lower because of cheaper Chinese imports."

"The typical U.S. household earned about 56,500 dollars, trade with China therefore saved these families up to 850 dollars that year," it noted.

The reverse is therefore also true -- blocking off Chinese imports through tariffs will raise prices for the average U.S. household by 850 dollars, it said.

How tariffs are already raising U.S. prices

The study said, as the tariffs against China, which affected 34 billion dollars worth of imports, only came into force on July 6, it is, of course, too early to see their full impact.

But the effect of other tariffs, and the price rises they caused, makes crystal clear what will happen to U.S. prices if tariffs against China are introduced.

A tariff on washing machines was followed by a 20 percent increase in the price of washing machines and dryers in the U.S.

The second major new tariff was on steel and aluminium. Steel prices were already rising in the U.S. before these tariffs were introduced but the tariffs inevitably significantly worsened this. By July 2018 U.S. prices on hot rolled band steel, used in numerous U.S. products, were 52 percent above their level in October 2017.

The study went on, The Wall Street Journal noted: "Polaris is raising prices on its… recreational vehicles to cover $15 million of the $40 million in tariff-related costs the Minnesota-based manufacturer expects to pay for foreign-made steel, aluminium and components from China this year. Polaris is also facing retaliatory tariffs from other countries on products it exports from the U.S., including the… motorcycles it ships to Europe. Chief Executive Scott Wine said Polaris would accelerate plans to move production of motorcycles that it sells in Europe to Poland from Iowa to avoid rising European Union tariffs on U.S. motorcycles."

This follows Harley-Davidson's decision to relocate part of its production out of the U.S. in order to avoid Europe's retaliation against U.S. tariffs, it added.

It continued that aluminium prices have increased by 11 percent. As a result, Coca Cola, the U.S.'s most iconic soft drink, announced it was taking the unusual step of raising prices midyear in North America because of rising costs, including prices for aluminium, it said.

Thousands of other manufacturers will be similarly affected. Caterpillar, the biggest U.S. construction equipment manufacturer, announced that it expected losses of 100-200 million dollars from tariffs -- putting upward pressure on its future prices.

The result of tariffs was therefore accurately summarized by the Wall Street Journal as "Soda, Motorcycle Prices Rise as Tariffs Hit Home for Consumers".

But tariffs on washing machines, which affected 10.3 billion dollars of imports, and on steel and aluminium, affecting 44.9 billion dollars of imports, cover a much smaller range of goods than tariffs affecting 250 billion dollars of imports which have been threatened by the Trump administration against China.

The price rise consequences of U.S. tariffs against China for U.S. buyers will therefore be more severe, it noted.

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