Consumer prices in tariff-affected categories have risen much more than the prices of goods not impacted by tariffs.
Consumer goods account for only about 25% of the items targeted by the tariff rate increase on Friday. However, consumer goods account for about 60% of whats left of imports from China.
The tariffs enacted so far in the trade battle with China have already raised the prices of goods in affected industries much more than the overall rate of inflation, made clearly visible in this chart from Goldman Sachs. "New evidence on the effects of the 2018 tariff rounds from two detailed academic studies points to larger effects on US consumer prices than we had previously estimated, admitted Goldman Sachs Chief Economist Jan Hatzius, in note to clients Saturday. "First, the costs of US tariffs have fallen entirely on US businesses and households, with no clear reduction in the prices charged by Chinese exporters.
And if the the trade war heightens, that effect could become more widespread. The tariffs in play currently only effect consumers fractionally. Consumer goods account for only about 25% of the items targeted by the tariff rate increase on Friday. However, consumer goods account for about 60% of whats left of imports from China that could become subject to U.S. tariffs if this goes to a full-blown trade war.
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