Americans are paying far less for televisions despite a hike on imports from China, indicating that critics of the Trump administration’s trade policies were badly off course when they claimed consumers would pay higher prices.
New tariffs on televisions imported from China took effect in September. The rate was originally set at 15 percent but the U.S. agreed in January to half that under the phase one trade deal. That cut takes effect Friday.
Television prices have fallen in every month since the tariffs were applied, including a 1.5 percent drop in October, a 2.2 percent drop in November, a 1.8 percent decline in December, and a 1.7 decline in January, according to data from the Bureau of Labor Statistics released Thursday. Compared with a year ago, television prices are have plummeted 20.8 percent.
Keep in mind that these drops are all under the original 15 percent tariff.
The decline in television prices highlights just how far off much of the reporting and analysis of the Trump administration’s trade policies has been.
- The Wall Street Journal: “Prepare to pay more for your next television.
The Trump administration’s proposed tariffs on Chinese imports include a 25% levy on TVs and related components. A report commissioned by two trade associations says the levy could push up television prices in the U.S. by 4% overall, and by 23% for those from China.”
- NBC News: “Bargain hunters shopping for TV sets, smartwatches and fitness trackers may be disappointed this holiday season when it comes to those Black Friday “doorbusters,” after a leading trade organization said it expected prices for tech products to rise by a total of $7 billion this quarter due to President Donald Trump’s tariffs on Chinese-made imports.”
- The Washington Post: “The casualty list from the U.S.-China trade war will include American consumers on Sunday when President Trump’s next round of tariffs on Chinese products takes effect, capping a month of contradictory policy announcements and second thoughts.
“This is the first time U.S. consumers will see the costs quite directly, right as we head into the busiest shopping time of the year,” said Edward Alden, an economics professor at Western Washington University.”
- The South China Morning Post: “Donald Trump’s China tariffs could increase TV and battery prices by 23 per cent, study finds.”
- The Associated Press: “President Donald Trump’s latest round of tariffs on Chinese imports is likely to deliver a direct hit on many consumers, who were largely spared from higher prices in his previous rounds of import taxes.
Beginning Sunday, the U.S. government will begin collecting 15% tariffs on $112 billion in Chinese imports — items ranging from smartwatches and TVs to shoes, diapers, sporting goods and meat and dairy products. For the first time since Trump launched his trade war, American households face price increases because many U.S. companies say they’ll be forced to pass on to customers the higher prices they’ll pay on Chinese imports.”
Televisions are not alone. The price of major appliances fell in December and January. For the year, prices are down 7.7 percent. Audio equipment prices are down 4.1 percent compared with a year ago. Computer and smart home assistant prices are down 5.8 percent. Telephones and tablets are down 14 percent.
Breitbrart News has been reporting on the absence of China tariff-driven price pressure for nearly two years. Prices have not risen as predicted because businesses have not been able to pass on the cost of the duties and many have simply turned to sources outside of China for products.
Consumer Electronics Daily, an trade publication, recently reported that “U.S. importers in December sourced 539,000 TVs from China, 46.2 percent fewer than in November and the lowest monthly Chinese TV volume since 507,000 sets were shipped here in February 2015, said Census Bureau data posted Sunday and accessed through the International Trade Commission’s DataWeb tool.”
The report continues:
Import statistics culled from DataWeb for the fourth full month in which the 15 percent List 4A Section 301 tariffs were active on Chinese goods showed the December exodus from Chinese TV sourcing accelerating at an even faster pace than in November. With it came signs the TV supply chain diversified into third countries other than Mexico, especially for the cheapest entry-level sets.
December TV imports to the U.S. from all countries declined 34.2 percent sequentially from November and 49.2 percent from December 2018, said DataWeb. China was 22.4 percent of TV imports for the month, down five points from November and nearly 40 points lower than in December 2018 when it was more than six in every 10 TVs shipped here. Chinese TV imports plunged 81.7 percent in December from a year earlier.
The bulk of the TV production that tariffs chased from China moved to Mexico (see 2001100002), but Mexican shipments themselves declined in December amid inroads from other sourcing countries, said DataWeb. U.S. importers sourced 1.63 million Mexican sets during the month, 11.1 percent more than in December 2018, but 35.9 percent fewer sequentially than in November.
Economists from the Federal Reserve were also badly wrong about the effects of tariffs, insisting that importers would be forced to pass on higher import duties to consumers. They deployed a flawed methodology to examine trade data and then just assumed the additional costs would be passed through to households. They also mistakenly assumed that costs of production would be higher outside of China.
More recent studies from Fed economists have tacitly admitted the errors. The Washington Post last month also acknowledged how wrong predictions by Fed officials, the mainstream media, and Wall Street analysts had been.