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Contrary to the mainstream media reporting, President Donald Trump may be winning the trade war with China, according to a leading European think tank.
The tariffs placed by the Trump administration could narrow the U.S. trade deficit with China by 17 percent, a recent paper published by Munich-based EocnPol Europe projects.
US - Import - Tariffs - Prices - Products
“The US import tariffs will increase the prices of the affected Chinese products in the United States and decrease the profit margin of Chinese exporters,” the fifteen page report says. “This might force some Chinese firms to stop exporting to the US, or even force them completely out of the market.”
The tariffs slapped on Chinese goods by President Trump could lead to a net gain of $18.4 billion for the government, the document estimates.
Report - Trade - War - China - Trade
The report titled “Who is Paying for the Trade War with China?” shows the changing trade dynamics between the two countries:
[T]he greatest share of the tariff burden falls not on American consumers or firms, but on Chinese exporters. We calibrate a simple economic model and find that a 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%. The US government has strategically levied import duties on goods with high import elasticities, which transfers a great share of the tariff burden on to Chinese exporters. Chinese firms pay approximately 75% of the tariff burden and the tariffs decrease Chinese exports of affected goods to the United States by around 37%. This implies that the bilateral trade deficit between the US and China drops by 17%.
Newspaper - Die - Welt - Findings - EconPol
German newspaper Die Welt backed up the findings published by EconPol report by citing the economic data published by the IFO economic research institute:
“Germany’s IFO Institute sees China in a tough spot. The IFO...
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