US Tariff Suspension May Stimulate Demand

⚓ April 21, 2020 / ⌚ 13:57 HK US TRADE POLICY

An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle, Washington, U.S. March 21, 2019. Photograph: Reuters/Lindsey Wasson

The US is looking to support imports by moving to suspend tariff payments as the federal and state governments look to reopen businessed and commercial activity.

This move today to announce a suspension of the collection of import tariffs for three months is desgned to give U.S. companies financial relief amid the coronavirus pandemic, according to administration officials.

Industry analysts have observed that U.S. Customs and Border Protection have adopted a pattern of and an established history of causing the cost of most consumer good in the US to be higher than they otherwise would be, by demanding a fee (tariff) to allow them to pass into the market. This fee is ultimately paid by the consumer in the form of higher prices.

The policy in its currect proposed form doesn’t remove this fee, they (U.S. Customs and Border Protection) simply intend to deffered collection of the charge to a later date.

So while it may provide a degree of cashflow relief to importers, not as positive as it may seem at first. It does not ultimately allow retailers to lower the price of their goods to US consumers or to improve their margins to recover profit lost during the mismanaged and arguably illegal market interferrence during the period of COVID-19 policy disaster.

Ultimatly the benefit may be limited in terms of stimulating demand or providing broader relief to US consumers.

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