US tariffs lead to drop in Chinese imports
WASHINGTON – U.S. tariffs have led to a sharp drop in Chinese imports and significant changes in the types of goods Americans buy from China, according to new data, purchases of telecommunications equipment, furniture, clothing and other goods moving to other countries.
Almost two-thirds of all imports from China – or about $ 370 billion in goods per year – were covered by tariffs imposed by the United States in 2018 and 2019. Tariffs now cover only half of Chinese exports to the United States, or about $ 250 billion worth of goods per year. , as US companies buy more from other countries, according to a Wall Street Journal analysis of Trade Data Monitor information.
The Trump administration imposed the levies in 2018-19, in an attempt to boost U.S. industrial production by making Chinese imports more expensive for the U.S. companies that bring them in. This so-called re-shoring of manufacturing has not happened to any appreciable extent, economic data shows, as US companies have instead turned to other Asian countries for sourcing.
Vietnam has been a particularly important beneficiary. It now ranks 6th in the world for imports to the United States, up from 12th in 2018.
“If the goal was to reduce imports from China, then it was successful,” said Craig Allen, chairman of the US-China Business Council, which represents US companies doing business in China. “But if the goal was to increase manufacturing employment in the United States, I see no evidence that this has happened. If the goal was to increase imports from other Asian countries or increase manufacturing employment in Vietnam, it has been successful.
Semiconductors are a prime example of a targeted item at the start of the trade war that has been declining from China, but has seen strong growth in Vietnam, Taiwan and Malaysia.
Among Chinese products hit by tariffs, the biggest impact has been on telecommunications equipment and computer accessories, where imports have fallen by about $ 15 billion each from their peaks in 2018, according to the Journal analysis.
Tariff revenues paid to the US Treasury by importers fell as a result. The United States collected $ 66 billion in tariffs in the 12 months ended in March, up from a high of $ 76 billion in February 2020.
Imports of non-tariffed goods from China have started to increase in recent months, after a global trade slowdown triggered by the Covid-19 pandemic. Despite this, imports from China totaled $ 472 billion for the 12 months ended March 31, up from a peak of $ 539 billion in 2018.
“The trade war had a more lasting negative impact [on Chinese imports] than the pandemic, ”said Adam Slater, senior economist at Oxford Economics. “The effects of the pandemic are starting to wear off, but the longer-term impact of the trade war remains.”
The United States and China signed an agreement to end the trade war in 2020, but the United States kept tariffs in place as leverage to ensure compliance with the pact by Beijing, which also kept its tariffs. on US exports to China.
Beijing has pushed for the abandonment of preferential tariffs. Although the royalties are paid by US companies, Chinese factories can lose their operations to competing factories in countries like Vietnam, Malaysia and Mexico. The trade war was directly aimed at Beijing’s ambitions to become a leader in advanced manufacturing technologies such as semiconductors and electric vehicles.
At a hearing on Wednesday, senators asked U.S. Trade Representative Katherine Tai if the Biden administration plans to maintain tariffs, with some saying the levies are hurting businesses in their districts. Ms. Tai was also asked to reinstate a now expired process in which companies could apply for tariff relief on certain products.
Ms Tai said her office is doing a “top-down review” of tariffs that will include the exclusion process, and companies “will be able to come in and tell us exactly what their concerns are and what their plans are.”
In an interview with the Wall Street Journal in March, Ms. Tai said the administration was not prepared to lift tariffs on Chinese imports in the near future.
“No negotiator goes away from leverage, do they?” she said.
The Trump administration imposed the tariffs in four waves, called brackets. Each tranche lists thousands of imports that would be subject to duties.
The Office of the U.S. Trade Representative said tariffs affect $ 370 billion in annual trade, but it has not updated those figures as trade has changed.
The first and second tranches went into effect in July and August 2018, covering $ 34 billion and $ 16 billion in goods respectively, based on contemporary trade figures.
The 25% tariff targeted items such as telecommunications equipment, metal alloys, semiconductors and electrical appliances – goods that tend to be purchased by firms as intermediate or capital inputs, but not directly by firms. consumers.
In the 12 months of March, the United States imported about $ 22 billion of items in the first tranche and $ 9 billion in the second, down 36% and 43%, respectively, from to their initial value.
The third tranche, which originally targeted just over $ 200 billion in imports, came after a summer of escalating trade tensions and came into effect in September 2018. During this phase, the Trump administration has targeted certain important categories of consumer goods, such as furniture and clothing. , as well as auto parts and many electrical components such as those used in televisions.
Tariffs for this third tranche of goods started at 10%, but were subsequently increased to 25%. Over the past 12 months, these imports totaled $ 119 billion, a decrease of 43%.
In some cases, the tariffs have prompted companies to speed up moves already underway outside of China. In the furniture sector, for example, many American importers were increasingly looking to Vietnam even before the trade war.
“Other places will be cheaper suppliers than bringing them back to the United States,” said Chad Bown, senior researcher at the Peterson Institute for International Economics.
In some industries, tariffs have caused companies to pull out in a way that “complements what the Chinese were going to do anyway,” Allen of the US-China Business Council said. “The prices of Chinese workers are really going up. Many manufacturers were moving overseas anyway. “
Smartphones are one example. The United States has not imposed tariffs on these, sparing Apple Inc. and others who have their phones assembled in China.
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Mobile phone exports from China continue to decline, as the world’s largest smartphone maker Samsung Electronics in Korea Co.
, nonetheless left the market, citing rising Chinese wage costs and a desire to diversify its supply chain.
The fourth and final price bracket was hit in September 2019. The list fell sharply on computers and accessories, clothing, TVs and shoes. An analysis of the Journal at the time found that these tariffs would reach about $ 111 billion worth of goods; the USTR office later said the tariffs targeted about $ 120 billion worth of goods.
Following a trade truce concluded in January 2020, tariffs on these items were lowered from 15% to 7.5%, and trade in the items did not drop as drastically. Over the past 12 months, it stood at $ 97 billion, down about 13%.
Write to Josh Zumbrun at [email protected]
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