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Backfire economics: Trade war updates – Publications – AEI

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AEI Backfire economics: Trade war updates 1. Jake Tapper interviewing White Trade advisor Peter Navarro today on CNN: “You and the administration keep saying the entire burden of these tariffs and this trade war is being borne by China.” Peter Navarro: “And that is absolutely true. We have seen absolutely no evidence in the price data. It’s not showing up in the consumer price index. They’re not hurting anybody here. They’re hurting China.” 2. “Trade war has already added 5% to typical U.S. shopping basket”: Analysis from financial consultants Gordon Haskett Research Advisors shows cost increases already have taken hold in a typical shopping basket of 76 regular items from Target and Walmart. Target’s shopping basket cost roughly 5% more in June than it did in October 2018, Gordon

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Backfire economics: Trade war updates

Backfire economics: Trade war updates - Publications – AEI

1. Jake Tapper interviewing White Trade advisor Peter Navarro today on CNN: “You and the administration keep saying the entire burden of these tariffs and this trade war is being borne by China.”

Peter Navarro: “And that is absolutely true. We have seen absolutely no evidence in the price data. It’s not showing up in the consumer price index. They’re not hurting anybody here. They’re hurting China.”

2. “Trade war has already added 5% to typical U.S. shopping basket”:

Analysis from financial consultants Gordon Haskett Research Advisors shows cost increases already have taken hold in a typical shopping basket of 76 regular items from Target and Walmart. Target’s shopping basket cost roughly 5% more in June than it did in October 2018, Gordon Haskett said.

Despite the president repeatedly saying that the Chinese are paying the protective tariffs imposed by his administration, “the money is coming from Americans, not the Chinese,” said Robert Kudrle, an international trade specialist at the University of Minnesota. “Essentially, the president is pitting Americans against each other.”

Trump has cast farmers hit by retaliatory tariffs as victims of the trade war who must be subsidized. He rarely mentions American businesses paying 10% to 25% in new import taxes or consumers who have had to absorb those taxes.

3. “The latest casualty of Trump’s trade war with China? California wine”:

When he began exporting his California wine to China two years ago, Hank Wetzel had high hopes of penetrating its fast-growing imported wine market. But today, as President Trump’s trade war shows no sign of waning, “the economics of selling there are horrendous,” he said. “Our importer is keen on our wines, but every $15 bottle I sell her now ends up costing her $30. We could soon be out of business there.”

“China was our fastest-growing export market,” said Honore Comfort, vice president for international marketing at the Wine Institute, a San Francisco trade group. “We were heavily ramping up our activities there, adding restaurant promotions and cultivating relationships with key retailers.”

But U.S. wine exports to China were down by 33% in the first half of this year compared with the same period in 2017. As the trade conflict drags on, “Chinese importers will buy from a different country,” she predicted. “We’ve worked on building those relationships for two decades. Now all of that time is basically a loss.”

4. “A new report offers fresh evidence that Trump’s trade-war tariffs are hurting the US — even though he says they’re not”:

In the supplemental questions to the Empire State Manufacturing and Business Leaders Survey, more manufacturers and business leaders said that tariffs and trade-war policy have pushed up prices and reduced profits compared to 12 months ago.

President Trump has long said that China is paying the price for the increased tariffs, and that they’re not hurting US consumers, workers, companies. But economists and analysts disagree. US consumers are paying more for products either imported from China or made with parts imported from there. Meanwhile, companies have said they would have to raise prices, and that downward pressure on earnings could lead to serious declines in stock prices. Some corporations are also hiring less amid escalating trade tensions, hurting US workers.

 

Backfire economics: Trade war updates
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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