Home Business U.S. companies bearing the brunt of Trump’s China tariffs, says Moody’s

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

by MD Samsuzzaman Siyam

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

Johannes Eisele | AFP | Getty Images

American businesses are bearing most of the cost burden from the elevated tariffs imposed at the height of the U.S.-China trade war, said Moody’s Investors Service.

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

That means U.S. importers pay around 18.5% more in price for a Chinese product subject to that 20% tariff rate, while Chinese exporters receive 1.5% less for the same product, according to the report.

If the tariffs remain in place, pressure on US retailers will likely rise, leading to a greater pass-through to consumer prices

Moody’s Investors Service

“A majority of the cost of tariffs have been passed on to US importers,” Moody’s said in the report.

“If the tariffs remain in place, pressure on US retailers will likely rise, leading to a greater pass-through to consumer prices,” the agency added.

Higher trade tariffs came into force during former U.S. President Donald Trump’s term. Most of those tariffs have remained in place and affect over half of all trade flows between the U.S. and China, said Moody’s.

U.S. tariffs on Chinese goods stood at an average of 19.3% on a trade-weighted basis in early 2021, while Chinese tariffs on American products were about 20.7%, according to data compiled by think tank Peterson Institute for International Economics.

Before the U.S.-China trade war in early 2018, U.S. tariffs on Chinese goods were on average 3.1% while China’s tariffs on American goods were at 8%, the data showed.

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