JP Morgan analysts report that US tariffs on China, imposed to protect its economy would actually do more harm to American consumers than good. According to a report by JP Morgan Chase, US President Donald Trump’s current duties imposed on Chinese imports would cost an average American household $600 per year. The cost is believed to shoot up to $1,000 if Trump gives a go ahead to his 10% additional tariff on remaining Chinese imports, worth $300 billion.
Last week, the United States Trade Representative announced that new tariffs, which were originally set to come in effect from September 1, would be delayed for certain products until December 15. Besides, some products were taken off the tariff list citing ‘health, safety and national security and other factors’. The relief is only temporary and warns of darker days ahead. The US additional tariff mainly targets consumer goods such as TV, apparel, cell phones, laptops, computers, toys, video game consoles, etc.
JPMorgan equity strategist Dubravko Lakos-Bujas mentioned in the report that US tariffs would ‘significantly’ impact the purchasing power of the ‘US consumer/voter ahead of the 2020 election’. The bank shared the report with its clients on Friday.
Lakos-Bujas added that the tariffs on China would burn off most of the benefits US households got from the tax cuts provided by the Republicans.
The bank’s report outrightly contradicts the recent statement given out by White House adviser Peter Navarro to CNN in an interview with Jake Tapper on Sunday. Navarro said, “(US) Consumers have not been hurt. China is bearing the whole burden.”
Navarro seemed to be echoing Trump message, as talking about the US economy bearing the brunt of its punitive tariffs, Trump recently said, “The economy is phenomenal. We had a couple of bad days but we are going to have some very good days because we had to take on China.”
The year-long trade war between two of the world’s biggest economies have brought economic slowdown upon global economy. With the recession looming over global markets, all the leading economies are hoping for a deal. The share market felt the worst jitters as ongoing tit-for-tat tiff makes investors anxious, leading to huge capital outflow.
Kristina Hooper, Chief Global Market Strategist at Invesco warned, “The strongest economies can become vulnerable to recession as a result of protectionist policies and trade wars.”