Ahead of the first round of US tariffs on Chinese imports, Asia Times noted that it would be the US consumer who bears the brunt of the pain.
At the time, the US$34 billion tranche of duties was designed to avoid consumer products, but any escalation, we wrote, would inevitably ensnare the cheap goods that US households rely on to keep expenses down.
One need only look at the breakdown of US imports from China:
“Cellphones alone account for US$70 billion of Chinese exports to the US. Consumer electronics along with telecom equipment comprise nearly US$200 billion,” Asia Times wrote in May, adding:
“Toys earned China another $28 billion. Slap on tariffs, and the must-have Christmas toy will cost 25% more, not to mention computers, flat panels and so forth. In terms of GDP, the impact will be slight, but a generation of Americans has come to regard cheap electronics as a birthright.”
On the flip side, in China, the costs will largely be absorbed by corporations, not passed on to consumers, as Hong Kong-based economist Larry Hu noted to Bloomberg on Wednesday.
“Mostly, it’s going to be absorbed by Chinese corporates instead of consumers,” said Hu, who works for Macquarie Securities. “It’s not going to have a big impact on Chinese consumer prices,” he stressed.
The administration of US President Donald Trump is poised to slap 10% or 25% tariffs on an additional $200 billion worth of Chinese goods.