Higher Tariffs to Harm US Consumers and Exporters; Economic Decoupling from China Unlikely, Experts Reveal

Former president Trump has promised to increase tariffs on imported Chinese goods to over 60% and introduce a 10% universal import tariff if he wins the Presidential election later this year. This would add to the tariffs from his first administration and the newer ones introduced by President Joe Biden, including on Chinese EVs.

However, Jason Miller, Eli Broad Professor in Supply Chain Management at Michigan State University, told the latest episode of The Freight Buyers’ Club, that authoritative research into US tariffs since 2018 shows no clear economic benefits to the US heartland. He noted that retaliatory tariffs on US exports have had clear negative impacts on employment, primarily in agriculture.

Miller argued that any increases of existing tariffs would exacerbate these negative impacts, as retaliation from China and other countries would harm US export industries. “I see no economic upside to this,” he said. “It will be a tax on consumers. And frankly, I think it’s one of the dumbest economic policies I’ve ever heard of.”

Jessica Dankert, Vice President Supply Chain, Retail Industry Leaders Association (RILA), said “tariffs are taxes on American businesses, consumers and workers”. She added: “Retailers basically want to see the US government focus on smart trade policy that opens up new markets, reduces tariff and non-tariff barriers and addresses unfair trade practices, without this unnecessary collateral damage to American businesses and consumers.”

Dankert argued that a 100% decoupling of the US economy from China is “simply not realistic” in a globalised economy. Jason Miller was even more dismissive, saying, “We’re not decoupling with China short of a war. There’s just no way at this point; the two economies are so intertwined.”

Miller also…explained. “In a world of transnational manufacturers, these ideas of decoupling just don’t exist. This is not the Cold War.”

He noted that many proponents of these policies draw from Cold War-era ideas. “We need more contemporary thought considering the globalized nature of the US economy,” he added.