Conventional wisdom in the mainstream media claims that President Donald Trump’s aggressive tariff policies against a multitude of Chinese imports to the U.S. will only incite a trade war — one that neither side wins.
“But a study by research network EconPol Europe suggests such an assertion isn’t quite true — in fact, it isn’t true at all,” according to the German publication DW.com.
“The EconPol Europe study calculates that Chinese exporters are bearing approximately 75 percent of the costs, meaning that eventually a net gain of $18.4 billion will be added to the U.S. economy,” DW.com reports.
The figures are static calculations, with no time period specified by the study’s abstract.
Since entering the White House in January 2017, Trump has imposed 25 percent tariffs on hundreds of Chinese imports to the U.S., which are valued collectively at $250 billion annually.
The study’s conclusions are doubly significant because EconPol — which is short for the European Network for Economic and Fiscal Policy Research — is a Munich-based academic center.
It links nine universities and institutes across seven nations.
EconPol generally hews close to European Union (EU) policies; and the EU has been highly critical of Trump’s tariffs.
“Voicing their frustration over the U.S. administration’s protectionist policies, the bulk of European politicians from all mainstream parties have criticized Washington for its aggressive trade stance toward China, maintaining the escalated conflict between the world’s two largest economies can only produce losers,” DW.com noted.
Chinese exports to the United States will decrease 37 percent as a result of Trump’s tariffs, according to the study, and that, in turn, will lower the U.S. trade deficit with China by 17 percent.
Among the other results projected by EconPol is a 4.5 percent increase in prices of the targeted imports to the U.S. from China.
Normally, such a price increase would hurt U.S. consumers.
But the study notes that the Trump administration tariffs “were levied strategically, making sure it wouldn’t be hard to find substitutions for affected Chinese imports.”
In other words — U.S. consumers will likely feel little negative impact because the domestic economy is so vast that they will simply move along to other suppliers.
“Let’s be clear that tariffs are nothing else but duties that have to be shouldered by foreign producers and domestic consumers,” co-author Gabriel Felbermayr said in a statement to DW.com.
“The problem with protectionism is that can indeed be economically beneficial for the United States,” Felbermayr also said, perhaps reflecting European worries about increased competition from a strengthened American economy.
A Japanese firm projects other countries besides the U.S. will benefit from Trump’s China tariffs, DW.com also noted.
“According to research done by Japanese financial services company Nomura Holdings, the search by companies based in the U.S. and China for suitable substitution for certain tariff-affected goods is benefiting Malaysia in particular, but Japan, Pakistan, Thailand and the Philippines are also among the beneficiaries.”
“Also in Asia, Vietnam has been gaining the most from firms relocating their production away from China. Malaysia, Singapore and India have also been profiting from this development,” DW.com said.
If the Japanese firm’s analysis is correct — this suggests that U.S. policy leverage in Asia will be strengthened significantly as a result of Trump’s actions.
Mark Tapscott is a senior investigative journalist.