U.S. corporations bearing the brunt of Trump’s China tariffs, says Moody’s

0
238

A Chinese and US flag on a booth during the first China International Import Expo in Shanghai, November 6, 2018.

Johannes Eisele | AFP | Getty Images

American companies are bearing most of the cost burden from the increased tariffs introduced at the height of the US-China trade war, Moody’s Investors Service said.

The rating agency said in a report on Monday that US importers absorbed more than 90% of the additional costs resulting from the US 20% tariff on Chinese goods.

This means that US importers will pay around 18.5% more for a Chinese product subject to this 20% tariff, while Chinese exporters will get 1.5% less for the same product, according to the report.

If tariffs persist, pressure on US retailers is likely to increase, resulting in greater passage to consumer prices

Moody’s Investors Service

“Much of the customs charges have been passed on to US importers,” Moody’s said in the report.

“If tariffs stay in place, pressure on US retailers is likely to increase, leading to more swirling through to consumer prices,” the agency added.

During the tenure of former US President Donald Trump, higher trade tariffs came into force. Most of these tariffs have remained and affect more than half of all trade flows between the US and China, Moody’s said.

US tariffs on Chinese goods averaged 19.3% on a trade-weighted basis in early 2021, while Chinese tariffs on American products were around 20.7%, according to the think tank Peterson Institute for International Economics.

Before the US-China trade war in early 2018, US tariffs on Chinese goods averaged 3.1%, while Chinese tariffs on American goods averaged 8%.