China retaliatory tariffs cost billions in lost consumption: study

By Howard Schneider WASHINGTON (Reuters) - Tariffs slapped by China on U.S. products cost the most affected communities billions of dollars in lost auto sales in 2018 as the hit to local incomes undercut household spending, according to an analysis released on Wednesday by the National Bureau of Economic Research. Those communities also saw slower job growth, Michael Waugh, an associate professor of economics at New York University's Stern School of Business and the study's author, said in the paper

Reuters December 12, 2019 00:07:30 IST
China retaliatory tariffs cost billions in lost consumption: study

China retaliatory tariffs cost billions in lost consumption study

By Howard Schneider

WASHINGTON (Reuters) - Tariffs slapped by China on U.S. products cost the most affected communities billions of dollars in lost auto sales in 2018 as the hit to local incomes undercut household spending, according to an analysis released on Wednesday by the National Bureau of Economic Research.

Those communities also saw slower job growth, Michael Waugh, an associate professor of economics at New York University's Stern School of Business and the study's author, said in the paper.

"Changes in trade policy had large effects on consumption," wrote Waugh, who analyzed county-level auto sales data before and after China retaliated against U.S. tariffs by imposing levies of its own, most notably on U.S. grown soybeans and pork.

The counties most exposed to tariffs, notably those in the agricultural Midwest, had auto sales roughly 2.5 percentage points lower than in counties whose local economies were less exposed to Chinese retaliation.

While car purchases were on average falling nationwide over that time, Waugh estimated that the most exposed communities lost additional auto sales worth around $2 billion, with another $7 billion in missed sales nationwide.

The overall impact on consumption was likely larger since Waugh's analysis focused only on autos. Consumers, he noted, may also have shifted to cheaper cars.

The finding speaks to a central debate in the U.S.-China trade war: How the economic pain of the tariffs in both directions is being distributed among producers, consumers and governments in the two countries.

The United States for example offered financial handouts to farmers who lost China export sales - a cost borne by all taxpayers. That does not appear to have prevented further local impacts in parts of the country where President Donald Trump has been the most popular.

The study did not estimate the number of jobs foregone as a result of China's retaliatory levies. But Waugh concluded that job growth in the goods-producing sector, which includes manufacturing, was 1.5 percentage points lower in the counties most exposed to Chinese tariffs.

(Reporting by Howard Schneider; Editing by Bill Berkrot)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

More than 20 killed in Mali airstrike on wedding ceremony - health worker
World

More than 20 killed in Mali airstrike on wedding ceremony - health worker

DAKAR (Reuters) - More than 20 people, including children, were killed in an airstrike during a wedding ceremony in central Mali on Sunday, a health worker with knowledge of the attack told Reuters. (Reporting By Edward McAllister; Editing by Aaron Ross)

Bleak start to new year for Britain as it enters third lockdown
World

Bleak start to new year for Britain as it enters third lockdown

By Estelle Shirbon and Natalie Thomas LONDON (Reuters) - Britain began its third COVID-19 lockdown on Tuesday with the government calling for one last major national effort to defeat the spread of a virus that has infected an estimated one in 50 citizens before mass vaccinations turn the tide. Finance minister Rishi Sunak announced a new package of business grants worth 4.6 billion pounds ($6.2 billion) to help keep people in jobs and firms afloat until measures are relaxed gradually, at the earliest from mid-February but likely later

France cranks up COVID-19 vaccine rollout to deliver shots faster
World

France cranks up COVID-19 vaccine rollout to deliver shots faster

By Dominique Vidalon and Sudip Kar-Gupta PARIS (Reuters) - France is stepping up its COVID-19 vaccine rollout by widening the first target group to include more health workers and simplifying a cumbersome process to deliver shots more quickly, Health Minister Olivier Veran said on Tuesday. France's inoculation campaign got off to a slow start, hampered in part by red tape and President Emmanuel Macron's decision to tread warily in one of the world's most vaccine-sceptical countries. France has fallen behind neighbours such as Britain and Germany, and the president is now demanding the vaccination programme be expedited