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Trump’s latest tariffs may make for a gloomier holiday season

Wednesday, July 11, 2018 15:33
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San José, CA – While most Americans won’t have a ‘white Christmas’ this year, many of us will be looking forward to the displays of lights on many homes and businesses. Now the Trump administration’s escalating trade war with China threatens to dim this coming holiday celebrations – or at least make them more expensive.

On July 10 the Trump administration began another round of escalation of its trade war with China. Trump announced a 10% tariff on an additional $200 billion of Chinese-made goods. While the initial 25% tariff on $34 billion of imports from China had very few consumer goods, this broader list, which is almost 200 pages long with some 7000 types of goods, does.

One of those listed are Christmas lights. The U.S. imports over $500 million of these lights each year from China. These lights make up over 90% of the total light imports, meaning that U.S. buyers will not be able to switch to other countries to avoid the tariffs. If these tariffs go through they would raise the cost of holiday lighting.

There are a number of imports where the U.S. gets 90% or more of its imports from China. At the top of this list are laptop computers, which are valued at almost $40 billion. With 93% of all imported laptops coming from China, and almost no laptops being made in the U.S. (ironically, the only U.S.-made laptops are made by Lenovo, a Chinese company), another round of U.S. escalation is bound to hit more expensive items such as laptops and cell phones.

This is exactly what the Trump administration has promised to do when the Chinese government responds to the latest round of U.S. tariffs. China only imports about $150 billion of goods from the U.S., and is already placing tariffs on $50 billion of them in response to U.S. tariffs. But China also imports services such as U.S. movies (half the top-selling movies in China in the first half of this year have been U.S. films) and education (China is the single largest country of origin for international students and about a third of foreign students in the United States). U.S. corporations also have major investments in China, usually with a Chinese partner. General Motors actually sells more cars in China than in the U.S. under this arrangement (China is the world’s largest car market in terms of number of vehicles sold). China could use a variety of so-called “non-tariff barriers” to hit back at the U.S. tariffs.

Not only are prices on consumer goods likely to go higher as Trump escalates the trade war with China, but prices of U.S. exports to China are already heading down. Prices of soybeans are near a ten-year low and fell 15% last month alone. China is the single largest market for U.S. farmers exporting soybeans, taking about a third of all exports. The pain for U.S. workers and businesses is growing in the wake of Trump’s trade war.


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