📝 U.S. Imports from China Have Fallen by Less Than U.S. Data Indicate: NY Fed

The rapid expansion of low-value direct-to-consumer sales from China has allowed a very substantial amount of trade to completely bypass all of the tariffs that have been imposed on China beginning in 2018. This post has suggested that there appears to be upwards of $100 billion in “missing imports” in U.S. data, and quite possibly at least $50 billion may be accounted for by this de minimis trade. This suggests that U.S. consumers could face larger consequences than meet the eye from the recent 10 percentage point tariff increase if the de minimis exception is ended for China and Chinese sellers do not slash their profit margins by reducing their export prices. For example, a sweater bought from China through an online retail site would rise in price to the extent the firm does not offset the new 33.5 percent tariff charge (16 percent general duty plus 7.5 percent on Chinese imports applied in 2019 plus 10 percent applied this year), not even including additional handling charges that the seller may impose to account for more costly customs procedures. - NY Fed