That’s the title of a new report published by a consortium of European academic institutes, and written by Benedikt Zoller-Rydzek and Gabriel Felbermayr. I don’t have a problem with the analysis, which is mostly straightforward. It’s just a problem with the title.
The paper is really a quantitative analysis of the incidence of the Trump tariffs. Here it echoes my post on the fact that US prices as well as Chinese prices will adjust.
However, the costs of the Trump tariffs are narrowly defined — there is no discussion of the retaliation costs (e.g., soybeans). There is no discussion of how China will retaliate by making life difficult for US multinationals with operations in China. Nothing is wrong per se with this analysis — partial equilibrium analysis makes problems more tractable. (And who knows what the Chinese will do with the CNY?)
A better title: “Who is Paying for the Trump’s Tariffs on Chinese Imports into the US?” Answer: So far, both American consumers (particularly lower income households that consume a higher proportion of Chinese produced goods) and Chinese exporters. Ceteris paribus re: exchange rates.