As Beijing has raised duties in response to the US administration's spate of tariffs, it also lowered trade barriers for exporters around the world, according to an analysis by the Peterson Institute for International Economics (PIIE). Since the start of 2018, Chinese tariffs on US products have jumped to 20.7%. Over that same time frame, China has reduced tariffs on competing products from other WTO countries to an average of only 6.7%, CNBC reported.
In 2018 all countries, including the US, faced an average 8% tariff in China, according to the institute report.
"Trump's provocations and China's two-pronged response mean American companies and workers now are at a considerable disadvantage relative to both Chinese firms and firms in third countries," Chad Brown, a senior fellow at the Peterson Institute, said in the report. "China has begun rolling out the red carpet for the rest of the world. Everyone else is enjoying much improved access to [the country's] 1.4 billion consumers."
Put another way, American products have become pricier for Chinese buyers while goods from other countries are less expensive. On average, in China, it is now 14% cheaper to buy something from Canada, Japan, Brazil or Europe than it is to buy from the US. While recent reports document how Indonesia, Bangladesh and Vietnam have stepped in to fill the void in American supply chains, the Peterson Institute analysis highlights how Beijing's own policy shifts have benefited traditional US economic allies.
To date, Washington has slapped 25% tariffs on $250 billion of Chinese goods. President Trump has also threatened tariffs on the remaining $300 billion worth of Chinese imports. In retaliation, Beijing has imposed duties on $60 billion in US exports, just under half of what the US sends to China each year.
The president and other administration officials have fiercely defended the tariff strategy, claiming that the trade war's economic burden will ultimately fall on China's shoulders. US Commerce Secretary Wilbur Ross doubled down on Monday, telling CNBC that President Trump is "perfectly happy" to impose tariffs on the remaining $300 billion of Chinese imports if the two countries fail to strike a deal.
Trump on Tuesday said he “will be having an extended meeting” with Chinese President Xi Jinping at the G-20 summit in Japan next week. The announcement came days after more than 600 companies wrote a letter to the president expressing their concerns about the trade war escalating. They warned the tariffs could cost the average family $2,000 each year and destroy 2 million US jobs. The same day, retailers RH and Tommy Bahama-parent Oxford Industries said they plan to raise prices to soften the tariff impact, cnbc.com reported.
And it’s not just China that American firms have been squeezed out of as a result of several policies by Trump. The president pulling the US out of the Trans-Pacific Partnership, for example, placed American beef exporters at a disadvantage versus their peers in Japan too, according to the PIIE.
“This is just one more good reason why trade wars are not easy to win,” said the researchers.