Before September 2019, President Trump’s tariffs on China avoided targeting final consumer goods—and potential consumer backlash. That is about to change.
Tariffs imposed in September covered apparel and accessories, and scheduled December tariffs will hit computer and electronic devices (61 percent of the new import value taxed in December) and toys, sporting equipment, and other manufactured goods (16 percent). The Trump administration says the tariffs are punishment for China preventing US access to Chinese markets and for violating US intellectual property rights. But imports in the two sectors hit hardest by the December tariffs are actually shipped mostly from multinational-owned factories. An estimated 95 percent of computer and electronic products and over half of miscellaneous manufacturing commodities that will be subject to new tariffs in December are from multinational enterprises.
Some subcontractors in China may end up swallowing the cost of these tariffs, but most of these exporters are non-Chinese-owned multinationals operating in China, and many are affiliated with US importers. Unavoidably, some American businesses and households will pay more for the phones, laptops, and tablets on which modern life now relies.
This PIIE Chart was adapted from Mary E. Lovely and Yang Liang’s blog post, They Saved the Worst for Last: Why Trump's Impending December Tariffs on China Should Be Rolled Back.