Economic Perspective: Costs of the Trade War

MARY WALDEN:

“Today’s program looks at costs of the trade war. Mike, many economists say we are in a trade war with China in which each country imposes tariffs on imports from the other country. Do we have any idea how much this monetary clash will cost the average person?”

MIKE WALDEN:

“Well we’re really in stage three of this trade war between the U.S. and China. First, there were tariffs imposed on importing washing machines and solar panels. Then came tariffs on steel and aluminum, and now we have tariffs on $34 billion of products, a variety of products. So that’s where we are right now.”

“The President has actually said that we can have more tariffs, maybe tariffs on another $200 billion of Chinese imports. We have some estimates of the costs of this trade war from economists at Princeton and the London School of Economics, and they estimate that for the first three stages, that’s washing machines, solar panels, steel, aluminum and $34 billion of other products, that’s going to cost the average person about $60 a year.”

“Now it’s going to vary though depending on how much income you make. If you’re making under $15,000 it’s going to cost you about $24. If you’re making around $160,000 it’s going to cost you about $140. Now if stage 4 is added, where the President actually goes to adding $200 billion of Chinese imports, then rather than the average cost to the average consumer being $64 that’s going to go up to $127.”

“So people have to decide if this is a lot of money or not a lot of money, but I think one thing is clear. This trade war will cost consumers some money.”