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Home » “So China is now paying us billions of dollars in tariffs”
Economy

“So China is now paying us billions of dollars in tariffs”

March 17, 2023No Comments2 Mins Read
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This is the economist Trump in 2018, quoted in Coy (2018). Now from the USITC “Economic Impact of Section 232 and 301 Tariffs on U.S. Industries” (page 22), a contradictory assessment.

The Commission’s econometric model estimates that the tariffs under Sections 232 and 301 caused an almost one-to-one increase in US import prices as a result of the tariffs. This implies that a 10% ad valorem tariff raised the price of US imports from China by about 10%. This almost complete pass-through (meaning that prices received by exporters were largely unaffected and prices paid by US importers increased by the same amount as tariffs) is unusual, but has also been found by other recent studies, which conclude that U.S. importers have borne almost the entire burden of Section 301 tariffs.

Here is the estimated impact of tariffs on steel prices.

Source: American ITC (2023).

Estimates of tariff pass-through are quite close to one, ie a 25% ad valorem tariff essentially results in a 25% increase in the price faced by a domestic consumer (in the broad sense). It means that We pay the fares, not the Chinese, in both cases.

So if you don’t pay attention, the United States seems like a small country when it comes to steel and aluminum markets (see Econbrowser posts [1], [2], [3]– so against Commentary by Mr. Bruce Hall).

This entry was posted on March 17, 2023 by Menzie Chinn.

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