"US Biden and Trump Tariff Bombs Will Raise Consumer Costs"

The Biden administration in the United States has imposed heavy tariffs on Chinese imports such as electric vehicles and semiconductors, sparking controversy over the correlation between tariffs and inflation. In particular, concerns are rising that tariffs could lead to increased costs for consumers and businesses, as former President Donald Trump, confirmed as the Republican presidential candidate, has pledged ultra-high tariffs on China.

According to local media such as The Wall Street Journal (WSJ) and The New York Times (NYT) on the 19th (local time), President Biden, like former President Trump, is actively using tariffs as a trade tool, leading to active analysis regarding the relationship between tariffs and inflation.

According to Goldman Sachs, a global investment bank (IB), a 1 percentage point increase in U.S. tariff rates is estimated to raise prices by 0.1 percentage points.

There are also research findings that the Trump administration’s tariff hikes on China, which actively used tariffs as a trade tool, significantly contributed to inflation. Professor Katherine Russ, an economist at the University of California, Davis campus, estimated that if the tariffs imposed by former President Trump on $300 billion worth of Chinese imports were abolished, the inflation rate in 2022 would decrease by 0.26 percentage points. Currently, former President Trump has pledged to impose an additional 10% universal tariff on all imports if he returns to the White House. In this regard, the White House estimated that U.S. household costs would increase by an average of $1,500 annually.

There is also an analysis from the International Monetary Fund (IMF) that companies absorb the tariff burden, so the actual inflation impact is not significant. However, if companies with reduced profits resort to layoffs or investment delays, it could negatively affect growth and employment, and households will inevitably have to bear costs in some form.

Robert Lighthizer, former U.S. Trade Representative (USTR) who oversaw trade policy during the Trump administration, also acknowledged that tariff increases could raise prices. However, he argued that inflation must be tolerated to increase manufacturing employment.

Former Representative Lighthizer told the NYT, "Some people think consumption is the end," adding, "In my view, production is the end, and a safe and happy community is the end. We must be willing to pay the price for that."

Casey Mulligan, chief economist of the economic advisory board during the Trump administration, pointed out that tariff increases "cause costs in the system, and consumers have to pay more."

The NYT reported, "The era of cheap Chinese goods has come to an end due to the Biden administration’s tariff hikes on China," adding, "The president’s move to protect strategic manufacturing sectors from low-cost competition aims to increase employment, but consumers will not like the higher costs."