The trade fight between the world’s two economic titans is about to make dozens of household goods more expensive for US shoppers, but thousands of miles away in China, consumers look set to escape much of the pain.
President Donald Trump is said to be intending to pull the trigger on tariffs targeting $200 billion of Chinese imports once a deadline for public input closes Thursday. Such a move — his biggest salvo in the fight with China so far — hits at the heart of the American household, risking price increases for everyday items from refrigerators and freezers to cutlery and towels.
Beijing has vowed to retaliate, but the targets they have selected and the fact China’s imports of US-made goods are dwarfed by what it exports, means the world’s biggest consumer market will be largely shielded from the spat.
The country’s counter-punch tariffs on $60 billion of imports from the US focus on manufacturing components, chemicals and medical instruments. And many of the ready-to-buy American goods that will be subject to duties by the Chinese government are hardly mass-market: yachts, riding crops and false beards.
“Mostly, it’s going to be absorbed by Chinese corporates instead of consumers,” said Larry Hu, a Hong Kong-based economist at Macquarie Securities. “At the bottom line, the direct impact is very small.” The differing lists of tariffs by the US and China reflect the trade imbalances. US imports from China were about $505 billion in 2017, much of it electronic goods, household furnishings and clothing. Only $130 billion of products, including soybeans, aircraft, machinery and plastics went the other way, reflecting China’s role as a manufacturing base, US figures show.
New data out Wednesday showed the US goods deficit with China in the seven months through July this year widened about 8 per cent to $234 billion from the same period in 2017.