Consumers are ‘unequivocally the losers’ in US-China trade war, says IMF
- Research from the International Monetary Fund finds that US importers ‘almost entirely’ bear the cost of tariffs, which are then passed on to the consumer
- Latest round of tariffs contains goods which are not easily substituted by imports from other markets, which analysts say will further hit consumers
Consumers “are unequivocally the losers” from the US-China trade war, according to new research by the International Monetary Fund, which outlines the damage the long-running dispute is doing to both sides.
The research, published on Thursday, found that “tariff revenue collected has been borne almost entirely by US importers”. Extrapolating that further, the International Monetary Fund (IMF) found that “some of these tariffs have been passed on to US consumers”, highlighting the rising cost of goods such as washing machines.
“A further increase in tariffs is likely to be similarly passed through to consumers,” found the researchers, which analysed price data from the bureau of Labour Statistics on imports from China.
A study by economists at the University of Chicago, published in April, found that a 20 per cent tariff on washing machines resulted in a 12 per cent increase in the cost for US consumers. It also drove up the price of dryers, since the products are often bought in pairs. Researchers found that even US companies such as Whirlpool, which were not subjected to the tariff, used them as an opportunity to raise their prices.
The study noted that the tariffs led to 1,800 new jobs being created in the US, but this was in part due to the opening of a Samsung washing machine plant in South Carolina. However given the price point passed to the consumer, these jobs cost the economy US$815,000 each, the researchers calculated.