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New China Tariffs Increase Costs to US Households

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New China Tariffs Increase Costs to US Households

Federal Reserve Bank of New York,

5 min read
3 take-aways
Audio & text

What's inside?

A study finds that tariffs on Chinese imports take money out of the pockets of American households.

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Editorial Rating

8

Qualities

  • Analytical
  • Hot Topic

Recommendation

This illuminating analysis from economists Mary Amiti, Stephen J. Redding and David E. Weinstein finds that the higher tariffs on Chinese exports to the United States that took effect in May 2019 will inevitably influence the daily lives of Americans, as the 10% levies did in 2018. Because tariffs both raise the prices of goods and lower the demand for them, the authors determine that the duties will create significant market distortions and burdens on consumers.

Summary

The costs from US tariffs on Chinese imports land on American consumers.

The effect of the 10% tariff imposed on some Chinese imports in 2018 fell on US households to the tune of an average annualized amount – consisting of incremental costs and efficiency losses – of more than $400 per capita. In May 2019, the United States raised the duty to 25%. This surge will have a substantial impact on the lives and budgets of American families. Researchers analyzed data on the 10% tariffs to determine the sources and size of the effects of the 2019 increase.

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About the Authors

Mary Amiti is an assistant vice president at the Federal Reserve Bank of New York. Stephen J. Redding is an economics professor at Princeton University, and David E. Weinstein is an economics professor at Columbia University.

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