• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
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HOME > Archive > 2022 > Volume 10 Number 4 (Aug. 2022) >
JOEBM 2022 Vol.10(4): 287-291 ISSN: 2301-3567
DOI: 10.18178/joebm.2022.10.4.714

Effects of Chinese Retaliatory Tariffs on Chinese Economy

Lingfei Liu

Abstract—During the 2016 presidential campaign, a consistent refrain from then-candidate Trump was to point to U.S. trade with China, and the agreements that enabled it, as primary cause of the loss of U.S. manufacturing jobs and intellectual property. He said China was responsible for “the greatest theft in the history of the world” and lambasted the U.S. trade deficit with China, which in 2016 stood at around $346 billion. The trade war caused economic pain on both sides and led to diversion of trade flows away from both China and the United States. This paper explores the effects of Chinese retaliatory tariffs on the Chinese economy during U.S and China trade war since 2018. Chinese retaliatory tariffs were almost wholly passed through into Chinese domestic prices, so that the entire incidence of the tariffs fell on Chinese consumers and importers, with no impact on the prices received by the U.S. exporters. The cumulative deadweight loss, a reduction in real income from the Chinese tariffs, is approximately $517 million in the whole year of 2018, with an additional cost of $6,321 million to Chinese consumers and importers in the form of tariff revenue transferred to the government.

Index Terms—Trade war, Trump’s policy, Chinese retaliatory tariffs, tariff revenue, deadweight loss.

Lingfei Liu is with the University of Illinois Urbana-Champaign, IL 61820 USA (e-mail: lingfei4@illinois.edu).

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Cite:Lingfei Liu, "Effects of Chinese Retaliatory Tariffs on Chinese Economy," Journal of Economics, Business and Management vol. 10, no. 4, pp. 287-291, 2022.

Copyright © 2022 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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