2023-11-23-牛津经济研究院-中国取消和提高关税对美国经济和就业的影响_38页_1mb

Summary of the Impact of China PNTR Repeal and Increased Tariffs on the US Economy and American Jobs

Core Content

This report evaluates the potential economic and employment impacts of revoking China's Permanent Normalized Trade Relations (PNTR) status and increasing tariffs on Chinese imports, under two scenarios: a US tariff-only scenario and a Chinese retaliation scenario. It is prepared for the US-China Business Council and based on modeling by Oxford Economics, which considers the broader implications of trade policy changes on the US economy, including macroeconomic effects, industry-level impacts, and state-level consequences.

Main Findings

Economic Impact

• GDP Losses:
  • US tariff-only scenario: $1.6 trillion loss over a 5-year horizon.
  • Chinese retaliation scenario: $1.9 trillion loss over a 5-year horizon.
• Employment Losses:
  • US tariff-only scenario: 744,000 fewer jobs by 2025.
  • Chinese retaliation scenario: 801,000 fewer jobs by 2025.
• Permanent Effects:
  • Even after the peak impact, the US economy would suffer permanent losses in output and employment.
  • Output would be 1.4% lower compared to the baseline.
  • 300,000 fewer jobs would be a net result of the trade policies.
• Consumer Impact:
  • Real household income would decrease by $11,100 in the Chinese retaliation scenario.
  • Consumer prices would rise by 1.2% in 2024, and producer prices by 3.5%, pushing CPI inflation to 4% and PPI inflation to 5%.
• Trade Reduction:
  • The share of US exports to China dropped from 8.6% to 7.5% of total exports between 2017 and 2023.
  • US exports to China would fall 2.1% below baseline by 2025 and 3.1% by 2028 in the US tariff-only scenario.

Industry Impacts

• Consumer-facing industries are most affected, as higher tariffs reduce domestic demand.
• Manufacturing sectors, particularly those reliant on Chinese imports, face significant output declines.
  • For example, under the Chinese retaliation scenario, manufacturing sectors could see a 4.4% output reduction.
• Services sector accounts for the majority of job losses in both scenarios.

State-Level Impacts

• Nevada, Florida, Arizona are among the hardest-hit states due to their reliance on consumer sectors.
• Midwest and Southern states, including Indiana, Kansas, Michigan, Ohio, would see the largest job losses in the US tariff-only scenario (75,000 net jobs lost).
• In the Chinese retaliation scenario, job losses in these states could increase to 83,000 by 2025.

Key Scenarios

US Tariff-Only Scenario

• Tariff Increase: US tariffs on Chinese imports would rise from 19% to 61%.
• Impact on Imports:
  • 11% tariff boost on agriculture, forestry, and fishing.
  • 42% tariff boost on manufacturing.
• Short-term Effects:
  • Inflation would rise immediately, with CPI at 4% and PPI at 5%.
  • US GDP would fall by 1.4% by 2025.
  • Consumer spending would drop by $420 billion.
• Long-term Effects:
  • Trade barriers would lead to a permanent loss in economic growth and competitiveness.
  • Supply chains would reorient, but the process would take time, leading to continued job and output losses.

Chinese Retaliation Scenario

• Retaliatory Measures: Chinese tariffs on US exports would rise from 21% to 38%, reverting to pre-WTO rates.
• Impact on US Exports:
  • US exports to China would face a 38% tariff increase, reducing competitiveness.
• Economic Fallout:
  • Real GDP would decline by $1.9 trillion from 2024-2028.
  • The peak impact on employment would be 801,000 fewer jobs by 2025.
• Long-term Consequences:
  • Reduced trade and investment would hinder technological and knowledge spillovers.
  • US firms would lose revenue and be pressured to cut jobs and investment.

Conclusion

The report underscores that increased tariffs and the potential repeal of China's PNTR status would have detrimental effects on the US economy and employment. While some short-term adjustments may occur, the long-term consequences would include a permanent loss of productivity and competitiveness, with lasting negative impacts on jobs, output, and consumer welfare. The Chinese retaliation scenario would amplify these effects, leading to more severe economic downturns and greater job losses.

The analysis also highlights the importance of the US-China trade relationship to global supply chains and economic stability. The fragile state of the US economy, including the risk of recession, makes any further trade escalation even more concerning. Overall, the report concludes that tariff escalation is not in the interest of US businesses or consumers, and would undermine the economic benefits of the current trade relationship.

Key Points

• PNTR Repeal would remove trade exclusions and increase tariffs to Column 2 levels (currently applied to Cuba, North Korea, Russia, and Belarus).
• US-China trade war has already led to a decline in trade volumes and economic output.
• Tariff escalation would lead to higher prices, reduced competitiveness, and job losses.
• Consumer and service sectors are most vulnerable to tariff increases.
• State-level impacts vary, with Nevada, Florida, Arizona and Midwest/Southern manufacturing hubs facing the largest declines.
• Retaliation would worsen the economic impact, leading to $1.9 trillion GDP loss and 801,000 job losses.
• Long-term consequences include permanent economic losses and reduced innovation due to decreased competition and resource misallocation.