Trade war’s modest hit

Trade War

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

- FWBP Digital Partners -

several weeks.

President Donald Trump

says China is paying the

duties. In theory, huge U.S.

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retailers could pressure

Chinese suppliers to cut their

prices to offset the tariffs,

which in effect would mean

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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.