A trade policy expert said shoppers may be able to expect modest price relief as the holiday season approaches after President Donald Trump and Chinese President Xi Jinping struck a deal to reduce tariffs on $30 billion in goods, including household goods and toys.
Clark Packard, a research fellow for international trade policy at the Cato Institute, broke down what the new agreement could mean for American consumers in an interview with FOX Business.
“Consumers can probably expect some cheaper household items and toys as we near the holidays. Beyond that, I don’t think a whole lot’s gonna change for your average American consumer,” Packard said.
Many of the items targeted for tariff reductions focus on “things you kind of give and get at the holidays for gifts,” Packard said, mentioning toys, dolls, puzzles, household and kitchen wares as examples.
HISTORIC $15B IOWA STEEL PLANT SIGNALS TRUMP TARIFF STRATEGY IS TAKING SHAPE, INDUSTRY LEADER SAYS
However, the extent of any savings remains unclear, as major retailers could respond with a mix of holiday discounts and profit-margin absorption, Packard said.
Still, the tariff reduction represents only a small fraction of the more than $400 billion in U.S. imports from China last year, Packard said. Estimates show the agreement drops the overall U.S. tariff rate on Chinese imports from about 22% to 20.5%, he added.
“Thirty billion dollars is not a whole lot. I do think there’s going to be some modest impacts. Some specific sectors will benefit, retail being one,” Packard said.
US, CHINA STRIKE DEAL TO LOWER TARIFFS ON $30B IN GOODS AFTER TRUMP-XI WASHINGTON SUMMIT
Packard noted that many high-tech items were excluded from the deal due to geopolitical and security concerns. Those areas include internet-connected auto parts, U.S. controls on advanced semiconductors and Chinese control of rare-earth mineral supply chains.
“The U.S. has concerns about Chinese control over the rare-earth mineral supply chain. … And China worries about the U.S.’s control over the semiconductor supply chain,” Packard said. “I don’t see a political willingness on either side in Washington or Beijing to really address kind of the true underlying causes and frictions.”
The agreement kicks major decisions down the road, reflecting short-term, incremental progress on lower-stakes items while leaving broader trade tensions unresolved.
“This deal essentially kicks the can to the new year. And, so, my sense is we’re going to continue to address these issues in short spurts until there is that willingness on both sides,” Packard said.
“But we’re really far away from any kind of grand bargain.”
Read the full article here