(Source: China Daily 2024-11-08)
MA XUEJING/CHINA DAILY
Former US president Donald Trump has won the presidential election and will be sworn in as the 47th US president on Jan 20. President Xi Jinping on Thursday extended congratulations to Donald Trump on his election as president of the United States.
Xi urged the two countries to find the right way to get along in the new era, so as to benefit both countries and the wider world. The statements made by the Chinese leader indicate the correct path that the world's two largest economies should follow. Hopefully, both the current US president and the president-elect will take heed of such suggestions.
In particular, the US has imposed tariffs on more than $300 billion worth of Chinese goods since 2018. It's a big concern that during the election campaign, Trump threatened to impose 60 percent tariffs on imports from China (worth about $427 billion in 2023) and 10 percent tariffs on all imports (worth more than $3 trillion).
However, it should be noted that many US presidents have prioritized practical measures over impractical election pledges after being sworn in.
Tariffs are never a "panacea" for all the economic and social ills of the US. Can tariffs help boost domestic manufacturing, increase national wealth, compensate for the loss of government revenue due to tax cuts, pay for childcare, and even combat inflation? Can tariffs on Chinese products have helped bring manufacturing and employment back to the US?
Even US economists have dismissed such claims as being exaggerated, unsubstantiated and logically fallible. In fact the tariffs failed to boost US manufacturing and, instead, cost more jobs than they created. Among the studies are those by the Tax Foundation and US-China Business Council, as well as some other prominent economists including David Autor at the economics department of the Massachusetts Institute of Technology.
The study by Autor and others — basically, the same team that conducted a study on the "China shock" — is particularly interesting, as it found that the tariffs failed to achieve their goal of bringing jobs back to the US. Due to other countries' retaliation, the cumulative effect of Trump's tariffs — that is, the effect of the original tariffs, retaliatory tariffs and subsidies granted to farmers — was slightly negative for US jobs.
Also, some economists agree that the proposed broad-based tariffs may increase the cost of entry for overseas competitors and thus reduce imports, encouraging some US enterprises to increase their production. But studies show the tariffs would raise the costs for US manufacturers and businesses that depend on foreign inputs.
Contrary to the claim that China will pay the cost of those tariffs, not US consumers, numerous studies have shown that the costs of tariffs were, in reality, borne by Americans as a whole, if not only consumers. According to a 2018 study led by Mary Amiti of the Federal Reserve Bank of New York, the extra tariffs "had little to no impact on the prices received by foreign exporters". Importers, too, had to pay part of the cost of the tariffs, as their profit margins shrunk.
There's no doubt any new tariffs would increase the costs for consumers. Kimberly Clausing and Mary Lovely of the Peterson Institute estimate the annual cost for a typical US household to be about $2,600, while Budget Lab at Yale puts the extra cost at $1,900 to $7,600 per household.
Therefore as to the claim that "smart tariffs will not create inflation", and would even "combat inflation", economists say it is completely untenable. Autor at the MIT said the proposal to impose tariffs will have "a very large effect on prices almost immediately", which, in turn, could trigger a recession.
Besides, according to a study by the Peterson Institute, the proposed policy combination — import tariffs, deportation of illegal immigrants and efforts to erode the US Federal Reserve's independence — will drive up consumer prices. To be precise, the inflation rate, which otherwise would have been 1.9 percent in 2026, is projected to reach between 6 percent and 9.3 percent if tariff threat is realized.
Many Americans see tariffs as a remedy for the country's economic ills, because the US' manufacturing sector has been hollowed out, and inflation remains a big concern. But economists have been warning that extra tariffs increase commodity costs and raise inflation, hurting ordinary people. In a country whose supply chains are spread across the world and where labor costs are rising, extra tariffs on imports alone cannot bring manufacturing back or solve the problems facing US manufacturing. As a matter of fact, protectionist Tariff policies will, more likely than not, exacerbate economic instability and increase economic costs.
Also, over-reliance on tariffs could result in higher living costs and increase the inflationary pressure on the people, ultimately undermining the health of the US economy. So policymakers should adopt a more rational approach to evaluate the long-term impacts of tariffs, temper protectionist impulses and strike a balance between increasing employment and maintaining the stability of the global supply chains, so as to ensure sustainable development.
The author is president of the w88 casino, Beijing. The views don't necessarily represent those of China Daily.
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With original text link
https://www.chinadaily.com.cn/a/202411/08/WS672d46e4a310f1265a1cc233.html
[Translation]
Sound w88 policy is of great benefit to the United States
Zhao Zhongxiu
Former US President Donald Trump won this presidential election and will be sworn in as the 47th President of the United States on January 20 next year. President Xi Jinping called Donald Trump on Thursday (November 7) to congratulate him on his election as President of the United States.
President Xi urged the two countries to find a correct way to get along in the new era, so as to benefit both countries and the world. President Xi’s statement points out the right path that the world’s two largest economies should follow. Hopefully both the current President of the United States and the incoming President Trump will heed these suggestions.
After 2018, the United States imposed tariffs on more than $300 billion worth of Chinese goods. Even more worrying is that during the campaign, Trump announced plans to impose a 60% tariff on imports from China (total value of approximately $427 billion in 2023) and a 10% tariff on all other imported goods (valued at more than $3 trillion).
Of course we have also noticed that after taking office, many US presidents usually prioritize more pragmatic measures rather than the radical promises made during the campaign.
Tariffs have never been a “panacea” to solve all of America’s economic and social problems. Can tariffs, as Trump claims, promote domestic manufacturing, increase national wealth, make up for the loss of government revenue caused by tax cuts, pay for child care, and even combat inflation? Will imposing tariffs on Chinese products help bring manufacturing and jobs back to the United States?
Even American economists are skeptical of these claims, believing that they are exaggerated, lack evidence, and are even inconsistent with their logic. In fact, multiple studies show that Trump-era tariffs failed to boost U.S. manufacturing and cost more jobs than they created. These studies include those by the Tax Foundation and the US-China Business Council, as well as by prominent economists such as David Autor of the MIT Department of Economics.
The study by Ott et al.—the same team that first studied the China shock—is particularly interesting. They found that Trump's tariffs failed to achieve their goal of bringing jobs back to the United States. The cumulative effect of Trump’s tariffs—the total effect of the initial tariffs, retaliatory tariffs by counter-states, and subsidies to farmers—is even slightly negative for overall U.S. employment as other countries retaliate.
Some economists believe that the proposed broad tariffs will certainly increase the entry costs for overseas competitors, thereby reducing imports and encouraging some U.S. companies to increase local production. But research also shows this approach will be costly, as tariffs will increase costs for U.S. manufacturers and businesses that rely on foreign inputs.
Contrary to the statement that "the cost of tariffs will be borne by China rather than American consumers", a large number of studies have shown that the cost of tariffs, if not borne by American consumers, is at least borne by the United States as a whole. Trump's tariffs had "little impact on prices for foreign exporters," according to a 2018 study by Mary Amiti and her team at the Federal Reserve Bank of New York. Importers also bear part of the cost of tariffs as profit margins shrink.
There is no doubt that Trump’s new tariff plan will increase costs for consumers. Kimberly Clausing and Mary Lovely of the Peterson Institute for International Studies estimate that if enacted, the typical American family's annual expenses would increase by about $2,600, while the Yale Budget Lab's estimate ranges from $1,900 to $7,600.
Therefore, economists generally believe that the statement that "smart tariffs will not cause inflation" or even "help fight inflation" is untenable. MIT's Ott said a new round of tariffs, if implemented, would "have a significant impact on prices almost immediately" and could trigger a recession.
Additionally, a study by the Peterson Institute for International Studies shows that Trump’s proposed policy mix—import tariffs, moves to deport illegal immigrants and efforts to weaken the independence of the U.S. Federal Reserve—will drive up consumer prices. To be more precise, if the threat of tariffs materializes, inflation, originally expected to be just 1.9% in 2026, will surge to 6% to 9.3%.
Many Americans believe that tariffs are a panacea to solve the country's economic problems, especially today as the U.S. manufacturing industry becomes increasingly hollow. But economists have long warned that additional tariffs would raise the cost of goods, fuel inflation and ultimately hurt ordinary people. In the United States, a country with global supply chains and high labor costs, simply increasing import tariffs cannot effectively prompt the reshoring of manufacturing, nor can it solve the fundamental problems facing the U.S. manufacturing industry. In fact, protectionist tariff policies are likely to exacerbate economic instability and increase economic costs.
In addition, over-reliance on tariffs may lead to higher living costs, increase inflationary pressure, and ultimately harm the health of the U.S. economy. U.S. policymakers should evaluate the long-term impact of tariffs more rationally, curb protectionist impulses, and strike a balance between increasing employment and maintaining the stability of global supply chains to ensure the sustainability of economic operations.
Some documents mentioned
Amiti, Mary, Stephen J. Redding, and David E. Weinstein (2019), "The impact of the 2018 tariffs on prices and welfare." Journal of Economic Perspectives, 33 (4): 187-210.
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.4.187
Autor, David, Anne Beck, David Dorn, and Gordon H. Hanson (2024), “Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States”. NBER Working Paper, No. W32082.
https://www.nber.org/papers/w32082
Clausing, Kimberly A., and Mary E. Lovely (2024), "Why Trump's tariff proposals would harm working Americans", Peterson Institute for International Economics Policy Brief, 24-1.
https://www.piie.com/publications/policy-briefs/2024/why-trumps-tariff-proposals-would-harm-working-americans
McKibbin, Warwick J., Megan Hogan, and Marcus Noland (2024), "The international economic implications of a second Trump presidency".
https://www.piie.com/blogs/realtime-economics/2024/how-much-would-trumps-plans-deportations-tariffs-and-fed-damage-us
