{"id":201117,"date":"2024-12-27T09:30:00","date_gmt":"2024-12-27T14:30:00","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/made-in-china-paid-in-america-what-trumps-new-tariffs-mean-for-the-us-economy\/"},"modified":"2024-12-30T11:06:44","modified_gmt":"2024-12-30T11:06:44","slug":"made-in-china-paid-in-america-what-trumps-new-tariffs-mean-for-the-us-economy","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/made-in-china-paid-in-america-what-trumps-new-tariffs-mean-for-the-us-economy\/","title":{"rendered":"Made In China, Paid In America: What Trump&#8217;s New Tariffs Mean For The US Economy"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-zinger-key-points\">Zinger Key Points<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Chinese imports still account for 24% of U.S. appliance purchases and 39% of consumer electronics like telephones, driving up inflation.<\/li>\n\n\n\n<li>Over 70% of U.S. imports of rare earths, graphite and antimony come from China, leaving industries vulnerable to supply chain disruptions.<\/li>\n<\/ul>\n\n\n\n<p>Goldman Sachs analyst<strong>&nbsp;Elsie Peng<\/strong>&nbsp;projects that the incoming Trump administration will sharply increase&nbsp;<a href=\"https:\/\/www.benzinga.com\/topic\/china\" target=\"_blank\" rel=\"noreferrer noopener\">tariffs on Chinese imports<\/a>.<\/p>\n\n\n\n<p>Average rates will likely rise by 20 percentage points, with larger hikes of up to 60 percentage points on non-consumer goods, Peng says.<\/p>\n\n\n\n<p>These changes could send ripple effects across the U.S. economy, from consumer prices to industrial production.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consumer Prices: How Much Will They Rise?<\/h2>\n\n\n\n<p>&#8220;We expect the second Trump administration to increase tariff rates on imports from China by around 20pp on average,&#8221; said Peng. &#8220;Tariffs will likely rise more sharply on non-consumer goods than on consumer goods.&#8221;<\/p>\n\n\n\n<p>Tariff increases will likely translate into price hikes on goods where the U.S. remains heavily reliant on Chinese producers. Today, China accounts for 11% of total U.S. imports \u2014 a drop from 18% before Trump&#8217;s first term \u2014 but for certain categories, the dependence is much greater.<\/p>\n\n\n\n<p>Durable household items such as appliances, along with consumer electronics and footwear, are among the most exposed. Chinese imports make up 24% of the U.S. market for appliances and as much as 39% for consumer electronics like telephones. Footwear and clothing also remain heavily reliant on China, with import shares ranging between 10% and 30%.<\/p>\n\n\n\n<p>Goldman Sachs estimates that fully passing the cost of higher tariffs to consumers could raise the prices of Chinese-origin goods by 2%-10%.<\/p>\n\n\n\n<p>\u201cThe US still relies heavily on China for many consumer products,\u201d Peng said.<\/p>\n\n\n\n<p>The investment bank predicts the average consumer prices for these items, regardless of origin, could rise by 1% to 2%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Thin Margins Could Mean Big Trouble For US Producers<\/h2>\n\n\n\n<p>On the production side, manufacturers will likely face increased costs due to tariffs on Chinese-origin inputs. While most industries are only modestly exposed \u2014 Chinese inputs account for less than 3% of total inputs in most sectors \u2014 certain industries could feel the pinch.<\/p>\n\n\n\n<p>For machine tools, auto bodies, furniture and textiles, tariff-related cost increases could represent 10%-30% of operating surplus. Even industries with relatively small tariff-related cost increases, such as a 0.5%-0.7% bump in final output costs, could find their margins squeezed.<\/p>\n\n\n\n<p>Some sectors face an even bigger challenge: over 70% of the U.S.&#8217;s imports of rare earths, natural graphite and antimony oxides are sourced from China. These materials are critical for the production of batteries, magnets, semiconductors and other components used in the auto, electronics and defense industries. Peng warned that finding alternatives will be difficult in the near term, leaving these industries vulnerable to supply chain disruptions.<\/p>\n\n\n\n<p>&#8220;Export restrictions by China could limit U.S. producers&#8217; access to critical raw materials,&#8221; Peng said. &#8220;Some materials cannot be easily substituted or sourced elsewhere in sufficient size.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retaliation Risk For US Exporters<\/h2>\n\n\n\n<p>China is likely to respond to higher tariffs with retaliatory measures, which could spell trouble for U.S. exporters. Agricultural products are particularly exposed.<\/p>\n\n\n\n<p>&#8220;More than 80% of U.S. wood, cereals, and animal product exports go to China, as do more than 50% of soybeans \u2014 the U.S.&#8217;s largest export to China \u2014 and nearly 20% of autos,&#8221; Peng said.<\/p>\n\n\n\n<p>China could impose retaliatory tariffs or reduce imports from the U.S. As a result, agricultural producers and automakers could face declining demand and increased competition in global markets.<\/p>\n\n\n\n<p>This could exacerbate existing pressures in industries that have already dealt with years of volatility.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Bottom Line: US Consumers, Businesses Brace For Higher Costs<\/h2>\n\n\n\n<p>For U.S. businesses, this means shifting production to other countries or suppliers won&#8217;t happen overnight. For consumers, it means price increases on Chinese goods will be difficult to avoid.<\/p>\n\n\n\n<p>For businesses, navigating higher costs and potential supply chain disruptions will be key to maintaining profitability. For consumers, expect the next phone, appliance or pair of sneakers to come with a slightly higher price tag.<\/p>\n\n\n\n<p>Every week, you can get special access to a deep-dive analysis into the upcoming week and events that could drive the markets, plus three trade ideas you can take advantage of as early as the opening bell.&nbsp;<strong><a href=\"https:\/\/www.benzinga.com\/premium\/ideas\/benzinga-edge\/?utm_source=campaignifybottomVarB&amp;utm_campaign=external\" target=\"_blank\" rel=\"noreferrer noopener\">Click here now to ensure you don\u2019t miss another round of trades.<\/a><\/strong><\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted December 27, 2024 &#8211; <a href=\"https:\/\/www.benzinga.com\/government\/regulations\/24\/12\/42701155\/made-in-china-paid-in-america-what-trumps-new-tariffs-mean-for-the-us-economy\">Made In China, Paid In America: What Trump&#8217;s New Tariffs Mean For The US Economy<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Chinese imports still account for 24% of U.S. appliance purchases and 39% of consumer electronics like telephones, driving up inflation.<\/p>\n","protected":false},"author":1128,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[146,147,8,12,148,7],"tags":[],"contributors-categories":[407],"class_list":{"0":"post-201117","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-macro","7":"category-north-america","8":"category-region","9":"category-securities","10":"category-text-articles","11":"category-traders-insight","12":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - 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