When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost — implying Chinese firms would have to cut their prices to absorb import "taxes" of up to 25 percent when the goods hit U.S. shores.
Instead, the prices Chinese firms charge have barely budged, meaning U.S. companies and consumers are paying the tariff costs, estimated at around $40 billion annually, New York Fed Reserve Bank researchers found in a study released on Monday.
As a result of the U.S.-China trade war, U.S. Customs and Border Protection adds as much as 25 percent to the import price as Chinese goods enter the country. If Chinese companies were absorbing that cost, they would have to cut their prices as much as 20 percent — a level that would allow U.S. retailers, manufacturers, or wholesalers to keep their own prices and profits stable.