As the United States eats Trump’s tariffs
Trump has greatly predicted that foreign countries will pay the price of its protectionist policies, and betting that exporters would absorb costs to maintain support from the world’s largest consumer market.
However, academic studies, surveys and comments from enterprises show that during the first months of the new Trump business regime, American companies are accounting for an account and some of them pass on consumers – probably more price increases.
“Most of the costs seem to be carried by an American company,” said Harvard University, Alberto Cavallo in an interview to discuss his findings. “We have seen the gradual passage of consumer prices and there is clear pressure ascending.”
A White House spokesman said, “Americans may face a transitional period from tariffs”, but the costs would “eventually be carried by foreign exporters”. Companies diversified supplier chains and brought production to the United States, the spokesman added.
Who eats rates?
Cavallo and researchers Paola Llamas and Franco Vasquez follow the price of 359 148 goods, from carpets to coffee, main online and retailers in the United States. They found that the imported goods became 4% more expensive because Trump began to store tariffs at the beginning of March, while the price of domestic products increased by 2%. The greatest increase in imports was observed in goods that the United States cannot produce on the domestic market, such as coffee or that come from highly penalized countries such as Turkey.
These price increases, although material, were generally much smaller than the rate of tariffs on the products concerned – which means that sellers also absorbed some of the costs.
However, US import prices that do not include tariffs have shown that foreign exporters increase their prices in dollars and pass on their American buyers depreciation of Greenback against their currencies.
“This suggests that foreign producers are not very absorbed too much if one of the American tariffs, in accordance with previous economic research,” said scientists in the Yale University Think-Tank Laboratory in a blog post.
National export price indices portray the same image. The costs of goods balanced by China, Germany, Mexico, Turkey and India have increased, with Japan the only exception.
The complete impact of the tariffs that need to be felt
Adaptation to Trump’s tariffs – an incomplete set of fees that have moved import taxes from an average of approximately 2% to an estimated 17% – is still ongoing. It can be seen that it takes months longer as exporters, importers and consumers who are arguing about who pays duties worth around $ 30 billion a month.
“We should not expect to be a one -off jump, but rather companies are trying to find ways to soften the wound,” and over time, Cavallo added.
European car manufacturers have looked – to absorb more price impact, but consumer companies, including the influx of detergent Procter & Gamble, Ray Ban Essilorluxottica and Swiss Watchman Swatch, won prizes.
About 72% of companies in Europe, the Middle East and Africa watched by Reuters have identified the price increase since the beginning of Trump’s Trade Salvos, shows Reuters Tracker. Only 18 companies warned of profitable margins.
Separate Reuters’ analyzes on the website of the Shein and Amazon electronic trading have already showed a robust price increase for Chinese products sold in the United States, from clothing to electronics.
China’s so-called “anti-in-volt” policy, according to which manufacturers are encouraged to combine the competition and even reduce the capacity in key sectors, could add fuel to the fire by limiting the supply of goods such as solar equipment.
All of this has set the scene for higher inflation in the United States. The Fed reduced its reference rate last month for fear that the labor market has weakened, but politicians are divided into whether inflation is probably disappearing by tariff.
The latest Governor of Fed, Stephen Miran, claims that tariffs are not inflation and have erased concerns about what he called “relatively small changes in some prices of goods”.
The estimated tariffs fed with bostone fed with the “back of the envelope” would increase the basic inflation by 75 basis points.
Fed chairman Jerome Powell said the tariffs were about 30-40 basis points of the latest inflation core of 2.9%, but the effect should be “relatively short-term”.
The Peterson Institute for International Economics estimated that inflation next year would be 1 percent point higher than if they were not raised tariffs, but then they would return.
Global trade saw suffering like tariffs bite
But the rest of the world has no reason to celebrate.
Since US consumers are trying to keep up with rising prices, it is likely that the demand for exports will slow down. Global S&P Global survey about shopping managers in companies around the world has shown new export orders since June that increases at a pace.
The export of the European Union to the United States dropped by 4.4% of the previous year in July, the last month for which the data were available, and in the former Powerhouse Bloc was 20.1% in August.
The World Trade Organization has also reduced its forecast for the growth in the volume of trade in global trade next year to just 0.5%, referring to the delayed impact of American tariffs. The American data on the consignment watched by the German Think tank The Kiel Institute also showed a clear descent.
Although all this can partially reflect the strong front of the orders at the beginning of the year in anticipation of tariffs, it also leads caution regarding business outlook.
In the next two years, the Dutch bank expected a 17% reduction in the export of EU goods to the USA, which cost 30 Basic GRD points of 30 Basic Points.
“The expected impact of American tariffs has not yet happened,” said Ruben Dewitte, economist Ing. “We assume that these effects will be more visible in the coming months.”
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