This article was published in CNBC May 18, 2021. We're sharing because it highlights how U.S. companies have been impacted by the 2018 U.S. trade war with China. The implications extend outside the U.S. and China, as companies turn to alternative sourcing in countries like Vietnam, as we learned in this Sourcing Journal article.
Be sure to check out our monthly Trade & Policy Updates for continuous monitoring of the U.S.-China trade war as well as the possibility of a new trade war between the United States and Vietnam.
American businesses are bearing most of the cost burden from the elevated tariffs imposed at the height of the U.S.-China trade war, said Moody’s Investors Service.
The ratings agency said in a Monday report that U.S. importers absorbed more than 90% of additional costs resulting from the 20% U.S. tariff on Chinese goods.
That means U.S. importers pay around 18.5% more in price for a Chinese product subject to that 20% tariff rate, while Chinese exporters receive 1.5% less for the same product, according to the report.
“A majority of the cost of tariffs have been passed on to US importers,” Moody’s said in the report.
“If the tariffs remain in place, pressure on US retailers will likely rise, leading to a greater pass-through to consumer prices,” the agency added.
Higher trade tarif