U.S. China Trade War Hits U.S. Economy by $7.8B

Just about everyone on the face of the planet has heard of the impending trade war that is taking place between the United States and China. These two economic powerhouses are having disagreements over nearly every aspect of existing trade laws, and it is having ripple effects throughout the world. It is not just affecting the two countries involved, as other countries are noticing an impact on currency valuation and the value of their own imports and exports. In the end, the impact might be most felt in the United States where it is now estimated that the hit to the U.S. economy as a result of the trade war with China is not approaching $7.8 billion. Continue reading to learn more about why this is the case.

Background to These Figures

The latest estimate of $7.8 billion as being the hit to the U.S. economy as a result of the trade war with China comes from data provided by the National Bureau of Economic Research. While there is revenue to be gained from higher tariffs placed on Chinese goods, and there are gains to be realized by domestic producers as they attach higher prices to products, the aggregate loss still comes out to $7.8 billion. It is an astounding 0.04% of the Gross Domestic Product. This study was commissioned by researchers at UCLA, UC Berkeley, Yale, and Columbia. As such, the data is seen as reliable and significant.

It has been uncovered that the annual loses being experienced by both consumers and producers come from the high costs now associated with imports. This is now estimated to be $68.8 billion, or 0.37% of the Gross Domestic Project. President Trump has been following through on many of his threats that the United States would begin placing higher tariffs and adding new ones, to many Chinese products being sold in the United States. This has effectively jump started a trade war with China that many do not see ending any time soon.

To date, the United States has already placed tariffs in excess of $250 billion on Chinese products. President Trumps and his administration has already stated that they are just getting started. New tariffs should be expected in the coming months unless some sort of deal can finally be struck between the two countries.

Negotiations Are Ongoing

Naturally, the economic hit to both countries has been rather astounding. To date, neither country has appeared willing to blink, but a compromise may be coming. There have been months of negotiations that have been taking place between both China and the United States. Some high level meetings have even occurred directly between President Xi Jimping of China and Donald Trump of America. While this has not yet resulted in any firm results, it has seen the United States postpone the planned increase on Chinese tariffs from 10 percent to 25 percent. This was originally scheduled to begin on the first of March, but it has not yet been implemented. One worrying sign, however, is that a very important meeting between both presidents that was to have taken place again in March has been delayed until April at the earliest.

The data recently released showing the massive hit that the trade war is having on the U.S. economy comes on the heels of a pro-trade group’s recent statements. Tariffs Hurt the Heartland has just announced that any trade war can cost consumers in excess of $20 billion. In addition, such a trade ware will further hurt U.S. exporters to the tune of an estimated $16 billion. This data was assembled from market research that has been conducted by Trade Partnership Worldwide. It is a telling report the explains the impact that a prolonged trade war with China could have if it were to last for a long time. There are some influential leaders around that world that have even remarked recently that the trade war between the United States and China is the single biggest threat facing the global economy today.

So, that is the data. The hit to the U.S. economy is already in the billions of dollars, so we must assume that it is for China as well. Hopefully, this will spark renewed interest in striking a deal that both countries can be satisfied with in the end. We shall see.


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