Thirty-seven percent of US imports from China are intermediate goods that are used in US production—such as in the machinery, tool, and auto industries—see chart below. In addition, small and medium-sized enterprises account for 41% of imports from China.
The bottom line is that imports from China are not only t-shirts, shoes, and TV monitors purchased by US consumers. Almost 40% of imports from China are intermediate goods used in US production.
As a result, a dramatic increase in tariffs on China will also increase US companies’ costs of production.
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