US Fed refutes Trump, affirming American consumers pay tariffs

By Wen Sheng Source:Global Times Published: 2019/11/26 19:57:45

A shopper walks past an adidas store at an outlet mall in Los Angeles on Tuesday. More than 170 shoe companies and retailers including adidas, Nike, Skechers and Under Armour have warned US President Donald Trump about the "catastrophic" effects of a trade war with China. Photo: AFP

US President Donald Trump has insisted that Chinese manufacturers and exporters were forced to pay the additional tariffs, after his administration imposed levies of up to 25 percent rate on the bulk of goods made in China. 

On Monday, the New York Federal Reserve Bank gave him a clear-cut rebuke, which is backed up with straight mathematical numbers. 

From June 2018 to September 2019, prices of Chinese goods exported to the US fell only 2 percent - instead of 25 percent, said the report. The price drop was basically in line with declines seen in many other nations as global trade hit a bump because of a raging trade war fought by the US. 

"The continued stability of import prices for goods from China means the US firms and consumers have to pay the tariff," the Fed bank's research team wrote.

China has for a long time made plain to the world community that trade protectionism and tariff wars are categorically "unwise and short-sighted" policies.  History has proved it is a double-edged sword, cutting into the opponent's interests and simultaneously hitting oneself. 

The Fed bank said during the past 16 months of the trade war with China, American importers, wholesalers and consumers were forced to foot an extra bill of more than $40 billion just because of Trump's imposing punitive tariffs on Chinese imports. 

The levies have in particular hiked the economic burden of the vast American middle class and poverty-stricken households. Wealthy Americans could take Trump's trade moves for granted, but the poor people have felt it acutely. 

And, as a matter of fact, the US' own economic growth is now losing steam and teetering on a cliff. First-quarter GDP growth of 3.1 percent was dragged steadily down to second-quarter growth of 2.2 percent and third-quarter growth of 1.9 percent this year. The prospect for 2020 growth is even feebler. 

If Trump administration chooses to stubbornly pursue protectionism and refuses to roll back high tariffs, the vast number of American farmers who used to export millions of tons of soybeans, sorghum, beef, pork, chicken, fruit and nuts to China could face a loss of exports to the Chinese market, and the loss could be permanent if the trade war lingers longer. 

Also, international supply chains, which support the growth of all world economies, are being seriously disrupted, causing tremors in a plethora of smaller economies relying on trade. The problem will need many years to fix. 

The author is an editor with the Global Times.


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