On May 13, 2019, Emma Newburger writes on CNBC:
Key Points:
- Goldman Sachs said the cost of tariffs imposed by President Donald Trump last year against Chinese goods has fallen “entirely” on American businesses and households, with a greater impact on consumer prices than previously expected.
- The bank said in a note that the trade war’s impact on U.S. consumer prices is now higher than previously expected, partly because Chinese exporters have not lowered their prices to better compete in the US market
- “One might have expected that Chinese exporters of tariff-affected goods would have to lower their prices somewhat to compete in the US market, sharing in the cost of the tariffs,” Goldman said.
Goldman Sachs said the cost of tariffs imposed by President Donald Trump last year against Chinese goods has fallen “entirely” on American businesses and households, with a greater impact on consumer prices than previously expected.
The bank said in a note that consumer prices are higher partly because Chinese exporters have not lowered their prices to better compete in the US market.
Trump has repeatedly — and inaccurately — claimed that China will pay for tariffs imposed by the U.S.
“One might have expected that Chinese exporters of tariff-affected goods would have to lower their prices somewhat to compete in the US market, sharing in the cost of the tariffs,” Goldman said.
“However, analysis at the extremely detailed item level in the two new studies shows no decline in the prices (exclusive of tariffs) of imported goods from China that faced tariffs.”
In addition, US producers have “opportunistically” hiked prices in response to protection from Chinese competitors, the bank said.
Goldman also said the risk of a final round of tariffs on the roughly $300 billion of remaining imports from China has now risen to 30%.
Further escalation of the trade war could also result in a 0.4% hit to GDP, and if trade tensions instigated a sell-off in the equity market, the growth impact could worsen, Goldman said.
“Our baseline expectation is that the U.S. and China will strike a deal later this year. We think this would come in the form of a gradual, staggered reduction in tariffs on a last-in, first-out schedule,” the bank said.
“There is, however, a risk of further escalation,” Goldman said.
Investors have been grappling with whether the trading relationship between the U.S. and China will actually worsen.
The most recent round of trade talks, which ended on Friday with no final agreement, was overshadowed by President Donald Trump’s decision to more than double tariffs on $200 billion of Chinese goods, from 10% to 25%.
White House Economic Adviser Larry Kudlow on Sunday said that Trump and Chinese President Xi Jinping will likely meet at the June G-20 summit in Japan. He said that he expects China to retaliate against the U.S., and acknowledged that the U.S. will pay for China tariffs.
Some traders are hoping that there’s still time to strike a deal, citing the notion that new tariffs are not applied to Chinese exports that were already in transit before the deadline, which provides more time before tariffs are applied to goods entering the U.S.
Gary Reber Comments:
This CNBC financial-slanted article appears to be pro-Communist China when it comes to importing from that slave-wage labor country and gutting our own manufacturing capabilities. It appears to be all right with them if Communist China is supported in its aim to be the dominant economy on Earth as long as in the short term prices we pay on outsourced and off-shored manufactured goods and products are cheap. Forget about empowering our own citizens to be productive and own advanced technological manufacturing to produce even less costly.
Who pays tariffs on imported goods? The American companies who import pay the tariffs. Of course, these American companies may choose to pass the tariff tax onto American consumers, but the aim should be to re-establish our manufacturing capabilities by financing the most advanced technologies, which can be employed to produce at the upmost efficiency. Simultaneously, we must ensure that EVERY citizen has the equal opportunity to acquire ownership stakes in the corporation growing the economy, both established and viable start-ups using insured, interest-free capital credit, solely repayable with the full earnings of the investments, and without the requirement of past savings. In other words, make it economic unfeasible to produce in foreign countries, and instead manufacture in our homeland. Tariffs should be imposed not only on Communist China, but also ALL countries who engage in slave wage labor and their conditions and environmental destruction, while pursuing environmentally-responsible “green” growth whose productive capital assets are broadly owned by our citizens, not concentrated ownership by the few, as is the case today.
This is yet another in a string of hit pieces by representatives of the wealthy capital asset ownership class. These hogist capitalists have been investing in building supply chain parts and finished products manufacturing and off-shoring entirely their manufacturing to Communist China and increasingly to other slave-wage labor foreign countries using “free trade” as their shield with the aim to produce as cheap as possible and maximize profits for their tiny ownership class.
This is a non-violent war of economics that we must win or forever, including other advanced Western countries, be dependent on Communist China and other slave-wage labor foreign countries to produce, leaving our people with effectively low-wage service jobs for a relative few at the bottom of the economic ladder and a few good-paying jobs creating the technologies that will replace the necessity for masses of workers, with the “machines” Made In China or Made In ………. The masses, due to tectonic shifts in the technologies of production, will see mass unemployment as this dependency grows and as a result of advance automation of all description.
Of course tariffs have fallen on U.S. businesses and houses and will continue to do until we catch up with our employment of advanced, technologically superior non-human inputs into the production of goods, products and services to give us a competitive edge with lower cost production but higher quality results.
This should be seen as a wake-up call for the American corporations to develop internal supply capabilities and wean itself more quickly from slave-wage labor foreign companies and countries. American companies should be investing in American, rather than Communist China and other slave-wage labor foreign countries. We must begin the process of de-incentivize American companies from investing in such countries to produce cheaper and more profitable, and return to investing in American-made manufacturing capabilities that offer expanded ownership opportunities and good-paying jobs for our citizens.
EVERY child, woman and man must be empowered to acquire ownership stakes in the future productive capital assets that will be invented and employed to produce the goods, products, and services American need and want to live affluently.
