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International Trade
USA
Tariffs
(...) Americans, not foreigners, are bearing almost the entire cost of U.S. tariffs, according to new research that contradicts a key claim by President Trump and suggests he might have a weaker hand in a reemerging trade war with Europe. (...)
The new research, published Monday by the Kiel Institute for the World Economy, a well-regarded German think tank, suggests that the impact of tariffs is likely to show up over time in the form of higher U.S. consumer prices.
The findings don’t mean that the tariffs are a win for Europe—on the contrary. German exports to the U.S., which have rocketed in recent years, have contracted sharply in the past year. (...)
The German research echoes recent reports by the Budget Lab at Yale and economists at Harvard Business School, finding that only a small fraction of the tariff costs were being borne by foreign producers. (...)
Rather than acting as a tax on foreign producers, the tariffs functioned as a consumption tax on
Americans, the report said. "There is no such thing as foreigners transferring wealth to the U.S. in the form of tariffs," said Julian Hinz, an economics professor at Germany’s Bielefeld University who co-authored the study.
The $200 billion in additional U.S. tariff revenue last year "was paid almost exclusively by Americans," Hinz said. That is likely to fuel higher U.S. inflation over time, he said. (...)
Why haven’t foreign producers cut their prices to sell more goods in the lucrative U.S. market? The German researchers suggest several possible reasons: The exporters might have found buyers in other countries, or they might think final tariff levels will change and they will maintain price levels in the meantime. (...)
