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Economic Effects of a Proposed Higher Tariff on Chinese Goods - 4/28/16

A presidential candidate has proposed a forty five percent tariff on Chinese imports.  As indicated by writer Michael Schuman, the theory is that this would protect American jobs.  However, what’s more likely according to Schuman is that these new tariffs would trigger a cascade of global economic consequences, mostly negative. 

Trade between China and the U.S. approached six hundred billion dollars in twenty fifteen.  There were many benefits for Americans, including in the form or lower prices for many good ranging from smartphones to sneakers. 

A study supplied by the Peterson Institute for International Economics analyzed the impact of a thirty five percent tariff imposed on Chinese tire imports by the U.S. in 2009.  It found that American consumers were forced to spend an extra one point one billion dollars on tires, while the tariff saved no more than twelve hundred jobs. 

That translates into approximately $900,000 for every job saved.  Moreover, a Federal Reserve study estimates that fifty five cents of every one dollar spent by an American shopper on a Made in China product goes to the Americans selling, transporting and marketing the product.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.