The U.S.-China trade war has worsened, with each
country slapping higher tariffs on the other’s products
last month and negotiations in limbo. The back and
forth has pushed down stock prices for the past
several weeks.
President Donald Trump
says China is paying the
duties. In theory, huge U.S.
retailers could pressure
Chinese suppliers to cut their
prices to offset the tariffs,
which in effect would mean
that China would pay. But two
studies have found that
Chinese exporters haven’t
reduced their prices, meaning
that U.S. consumers and
businesses are shouldering the cost of the duties.
Other tariffs have worked the same, including
duties Trump announced in late 2017 on imported
washing machines. Prices on both washers and
dryers — typically sold as a set — rose 12% each.
Still, the overall hit to the
U.S. economy will likely be
modest, unless the trade war
escalates further. Oxford
Economics, a forecasting firm,
predicts it will shave 0.3
percentage point off U.S.
growth in 2020. China will get
hit worse, Oxford estimates,
because its exports will fall
sharply, cutting 0.8 percentage
point off growth.