The
countries that pay the highest US tariffs, and the products they sell. Tariffs
on China and Mexico could cost about $1,000 per American per year, by Mark
Fahey, 12/7/16
After decades of U.S. trade
liberalization, President-elect Donald Trump could make sweeping changes that
would limit the supply of some cheap goods from abroad.
Trump has suggested using double-digit
tariffs to punish companies that leave the country and to rebalance trade
accounts with strong exporters — especially China. That would mark a dramatic
shift from the thousands of U.S. tariffs already on the books, which levy an
average trade-weighted tax of 1.5 percent on goods coming into the country.
Some countries pay close to zero
overall, while others pay an average of 7 percent or higher, depending on
individual trade agreements and the goods they export. Last year, total tariffs
collected came to $34 billion out of $2.2 trillion in imports, or about $100
for every person in the U.S., according to a CNBC analysis of data from
the U.S.
International Trade Commission.
More than 40 percent of those tariffs
already come from China, and other smaller nations like Indonesia also pay a
high price to access the American market.
The tariffs themselves are remarkably
granular: If you're in Vietnam and want to import boys' dress shirts
manufactured with man-made fibers (with less than two colors), it'll cost close
to 30 percent. But Mexico could ship the same shirt for free, and anyone could
import certain types of mittens without paying tariffs.
Most of the tariffs collected on
incoming goods are levied on clothes, shoes and vehicles, according to CNBC's
analysis. Those three product categories alone account for more than half of
all duties collected, though they make up only about 2 percent of imports by
value.
The import value of those clothes and
shoes is worth a fraction of that for electronics, machinery and cars, but clothes and shoes are taxed at a
much higher rate. On average, apparel tariffs charge 13 to 14 percent, compared
with less than 1 percent for some of those other goods. That's why consumers
today barely notice the cost of tariffs, while a company selling a specific
product can be slammed by even a small increase.
"Some of the things we import, like
electronics, don't have high tariffs, but a lot is clothing and we do have high
tariffs on those items," said Bryan Riley, senior policy analyst in trade
policy at the conservative Heritage Foundation. "If tariffs costs me a couple
hundred dollars a year, I probably won't notice, but if you're New Balance tennis shoes it can be pretty important."
When a tariff is increased, domestic
prices also go up. The price may simply be passed along to consumers, or a
decline in foreign competition could put less downward pressure on the price of
domestic goods. Take, for instance, the light-truck tariff known as the "chicken tax," which has protected American-made
trucks from German imports for more than 50 years. (The U.S. originally
introduced the tax in retaliation for a German duty on U.S. poultry imports.)
When was the last time you saw a European pickup truck on the road?
Either way, the final cost of the tariff
tends to fall on American consumers. For that reason, tariffs are often
considered a regressive tax, since price increases tend to hit low-income Americans the
hardest.
So if the current tariff load comes out
to a little more than $100 per citizen, we can do a similar
back-of-the-envelope calculation to determine how much tariff increases put in
place against countries like China or Mexico would increase prices. If we
raised tariffs on China from around 3 percent to 45 percent
and Mexico from close to zero to 35 percent, that would cost companies importing goods from abroad a
little more than $300 billion a year, assuming all else was equal.
If that price was passed on to
consumers, that's almost $1,000 for every person in America (other analyses
have suggested a similar amount or even higher) assuming the amount of Chinese and
Mexican imports to the United States remained the same.
Companies tend to notice when tariffs increase costs
related to their specific needs, but if we instituted sweeping new tariffs on
our biggest trade partners, everyday citizens would also feel a real impact on
their wallets.
Comments
The US
imposes modest Tariffs on clothing and tiny Tariffs on everything else. German
tariffs on US cars is 25%; US tariffs on German cars is 2.5%. Other countries
have a Value Added Tax of up to 25% and that is enough to kill sales of US-made
goods.
Norb
Leahy, Dunwoody GA Tea Party Leader
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