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US-China trade war hit US economy by $7.8bn

The US-China trade war has roiled markets and hit the US economy by $7.8bn (£5.8bn), according to a new study by the National Bureau of Economic Research (NBER).

“After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8bn (0.04% of GDP),” the study found. The NBER paper was co-written by researchers at prestigious US universities UCLA, UC Berkeley, Columbia, and Yale.

Researchers added that “annual consumer and producer losses from higher costs of imports were $68.8bn (0.37% of GDP).”

Since July last year, US President Donald Trump has followed through on threats of extra tariffs on China, kickstarting a trade war with the country. The US has already slapped around $250bn worth of tariffs on Chinese products and the Trump administration has said it will ramp them up.

Chinese president Xi Jinping meets US President Donald Trump. Photo: Reuters
Chinese president Xi Jinping meets US President Donald Trump. Photo: Reuters

This has led to months of negotiations between the two countries. The Trump administration has since postponed a planned increase of China tariffs from 10% to 25%, which was originally scheduled for 1 March. A key meeting between Trump and Chinese president Xi Jinping has reportedly been postponed to at least April this year.

The findings from the NBER come a day after pro-trade advocacy group Tariffs Hurt the Heartland showed that trade wars cost consumers $20bn and US exporters $16bn, using data commissioned from market research firm Trade Partnership Worldwide.

When Yahoo Finance UK spoke to a raft of executives at the World Economic Forum in Davos, Switzerland earlier this year, the world’s most powerful people said that the US-China trade is the biggest threat to the global economy.


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