Trump’s latest round of tariffs will hit US consumers hard

Experts say Americans — who have been footing the bill for the president's trade war — will be hit even harder this time around.

Trump's latest round of tariffs will hurt US consumers more than the last
Trump's latest round of tariffs will hurt US consumers more than the last, experts say. (Photo credit: MANDEL NGAN/AFP/Getty Images)

President Donald Trump’s latest round of tariffs went into effect Friday morning, targeting $200 billion worth of Chinese imports and raising duties from 10% to 25%.

Already, China has responded, expressing “deep regret over the development” and promising to enact “necessary countermeasures.”

Experts say the hike will likely hit American consumers harder this time around than in the past.

“[A 25% duty] needs to be passed on to the consumer. It is just too big to dilute with those other factors,” Jake Parker, vice president of the U.S.-China Business Council, told The Associated Press.


Parker told the AP the previous 10 percent duty hike “was absorbed by companies and offset by a weakening of the Chinese currency’s exchange rate.”

Trump spent much of Friday morning tweeting about the tariffs, which came after trade talks between the two countries began to unravel earlier this week. Administration officials told Politico that Trump’s top trade and economic advisers had urged him to allow the tariffs to take effect as scheduled, confident that the trade war would instead hurt China more than it would U.S. consumers.

Trump claimed Friday that the trade discussions with China would continue despite the tariffs, promising that the duty hike would bring “wealth” back to the United States in the interim.

“Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do,” he tweeted. He said his administration would buy back wilting crop surpluses from American farmers hit by the trade war with the windfall, suggesting they would be used for “humanitarian” purposes.

“The U.S. only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance. With the over 100 Billion Dollars in Tariffs that we take in, we will buy agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance.”


The president appeared to be referring to a promised $12 billion bailout program intended to off-set the impact of his tariffs on U.S. farmers. The program gives farmers funding to mitigate “trade damages,” and in some cases purchases their goods to pass along to national food assistance programs.

Though the program officially launched last year, it had only distributed a fraction of the $12 billion by the end of last year. Experts said the program had been plagued by bureaucracy and a slow distribution process, and often paid out far less to farmers than they might collect in profits during a normal year, leading to widespread frustration.

Trump’s trade war with China has done more to hurt Americans over the past two years than help them: According to two recent studies out of the National Bureau of Economic Research (NBER) and the Centre for Economic Policy Research (CEPR), U.S. citizens are already paying a steep price.

“Annual consumer and producer losses from higher costs of imports were $68.8 billion (0.37% of GDP),” the NBER researchers wrote. “After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8 billion (0.04% of GDP).”

They added that U.S. tariffs “favored sectors located in politically competitive counties, but retaliatory tariffs offset the benefits to these counties.”

“We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war,” they wrote.

The CEPR researchers presented similar findings.

“Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods,” they wrote. “Overall … we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018.”


Though China has in the past responded to the president’s tariffs in kind and pledged to answer his latest move on Friday, Parker told the AP Friday that Chinese officials were seeking “minimal retaliation” this time. “We’ve actually seen an increased sensitivity to U.S. companies at the local level,” he said.

A statement from China’s Ministry of Commerce echoed that sentiment.

“We hope the United States will meet us halfway, and work with us to resolve existing issues through cooperation and consultation,” officials wrote.