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In Delaying Tariffs, Trump Faces Up to Economic Reality


He later imposed tariffs on an additional $200 billion of Chinese goods, initially at a rate of 10 percent and then at a rate of 25 percent. That batch of tariffs affected more consumer products than the first round, but popular retail goods like clothes and cellphones were left off the list.

This month, Mr. Trump threatened a 10 percent tariff on about $300 billion in imports, or almost all of the Chinese goods that had not yet been taxed. Some of those tariffs will take effect on Sept. 1 as planned. The move announced on Tuesday, which also excluded some products, like car seats, from the new tariffs entirely, means a large swath of Chinese imports won’t be hit with tariffs until Dec. 15. That effectively staves off any tariff-related price increases for those products until after holiday shopping has started.

Thus far, the tariffs have not been a huge burden for consumers. Data from the customs agency shows that all of the China tariffs together raised $24 billion through Aug. 7. That works out to roughly a 5 percent tax rate on the total value of imports from China since Mr. Trump first began imposing the levies. As the list has grown, the pace at which revenue from the tariffs is collected has increased. The next round of tariffs will accelerate it even further.

Inflation remains below the Federal Reserve’s 2 percent target rate, a fact Mr. Trump sometimes cites as evidence that the tariffs have not raised prices. That’s a leap of logic. The overall inflation rate is too broad, encompasses too many prices and is affected by too many other factors to declare there has been no effect on consumers.

In February, economists at the Federal Reserve Bank of San Francisco estimated that the first wave of China tariffs would raise the inflation rate by 0.1 percentage points. They predicted that a possible expansion to 25 percent tariffs on all Chinese imports, still short of what Mr. Trump has announced, would add an additional 0.3 percentage points.

Goldman Sachs researchers echoed that finding in a note this week. They did so by analyzing changes in inflation for a group of goods that has been, or is about to be, directly affected by the tariffs. The sample is narrower than the one that determines the overall inflation rate, which makes tariff-related movement easier to spot.

“Our analysis of consumer prices, imports, and tariff rates in tariff-affected goods categories suggests that most tariff costs were passed on to consumers,” the analysts wrote, “and that there were sizable price spillovers as well.”


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