Ding Shuang, chief China economist with Standard Chartered Bank in Hong Kong, said that – together with previous US tariffs on US$50 billion of Chinese goods – a 10 per cent US tariff on US$200 billion of Chinese imports would drag down China’s growth by 0.4 percentage points, increasing to a 0.6 drop if the tariffs are increased to 25 per cent.
How likely is it that these tariffs will discourage purchase of Chinese goods? Many times, there is no substitute and stuff from China is dirt cheap anyway. Plus, the tariff is presumably paid on the wholesale price, so that a 10% tariff at wholesale could end up being 5% on retail if there is a 50% markup. Also, I purchased an LG refrigerator which cost as much as one made by Whirlpool in Indiana or some such place, so the markup must have been quite high. I conclude the wholesaler has plenty of slack to absorb part of the tariff.