Event: according to CNBC News quoted by globegroup, Biden said recently that he might cancel some tariffs on Chinese imports. As the mid-term election approaches, inflationary pressure forces the Biden administration to consider liberalizing import tariffs on China. Since Biden took office, US inflation has continued to rise, and the CPI hit a 40 year high in March. Inflation has become the main concern of voters. After the official announcement of April CPI on May 11, Biden's net objection rate increased from 11.2% to 11.5% on May 16.
Imported inflation is more serious in the United States, and tariffs have pushed up the cost of living of low-income families in particular. The import price index of the United States is 3% ~ 4% higher than the consumer price index. The characteristics of imported inflation are prominent. Reducing import costs will help to control inflation. The trade war tariffs cost American residents about $81 billion more in living costs, and import tariffs are cumulative tax rebates, which may bring a heavier burden to low-income families. Trade liberalization helps to alleviate US inflation and reduce the prices of related products through three paths. 1) Through retail channels, the price reduction of end products will directly and quickly benefit American consumers. 2) As the largest part of US imports, the reduction of import costs of intermediate products will be gradually transmitted to the terminal, so as to reduce the price of finished products. 3) According to the computable general equilibrium model, when imported products and domestic goods are highly replaceable, the decline of tariffs will lead to the competition between imported goods and Chinese goods, thus forcing Chinese companies to reduce the price increase.
In terms of tariffs, the abolition of additional tariffs is conducive to the recovery of the world economy, and the high inflation consumption industry chain related to people's livelihood focuses on. The abolition of tariffs is beneficial to China, the United States and the world. In particular, under the current inflation situation, the abolition of tariffs is in the fundamental interests of consumers and producers in China and the United States and is conducive to the recovery of the world economy. On May 11, the Brazilian Ministry of economy announced the formal reduction and exemption of import tariffs on 11 products. On May 12, Vietnam terminated its anti-dumping measures against some galvanized steel products originating in China and South Korea. In the United States, the way to reduce inflation and control the price of relevant products by reducing the tariffs on consumer goods and their upstream intermediate products is the key, which is also worthy of focus in the follow-up.
The four lists of tariffs imposed by the United States on China are based on whether the end consumer goods and intermediate goods are completely liberalized. If the end consumer goods and intermediate goods are completely eliminated, the corresponding trade volume will be about US $226.7 billion in 2021, accounting for 78.7% of the total additional tariffs imposed by the United States and 44.8% of the total trade volume of China imported by the United States. If only terminal consumer goods are eliminated, the corresponding trade volume will be US $111.76 billion in 2021, accounting for 38.8% of the total additional tariffs imposed by the United States and 22.1% of the total trade volume of China imported by the United States.
The core potential beneficiary industries of tariff reduction: household appliances and textiles in consumer goods, electronic and electrical products in intermediate products & parts, valves, pipes and plastics.
The top five industries in terms of trade volume of consumer goods are household goods (17%), electrical equipment (10%), knitted clothing (9%), toys, games and sports equipment (7%) and non knitted clothing (7%). From the perspective of core products, the product segments of household products are relatively scattered, mainly including seats, lighting devices, etc; Electrical equipment is mainly household appliances, including cameras, color televisions, vacuum cleaners, etc; Knitted clothing is more dispersed than household goods, mainly sweaters & pullovers, and women's clothing; Toys, games and sports equipment are mainly concentrated in physical exercise equipment and supplies.
The top five industries in terms of trade volume of intermediate products are electrical equipment (21%), mechanical equipment (21%), plastic products (12%), automobile and parts (9%) and steel products (6%). From the perspective of core products, the subdivided products of electrical equipment are relatively scattered, mainly including lithium batteries, intelligent controllers, electrical equipment and mobile phone parts; Mechanical equipment also includes a large number of subdivided products, accounting for a relatively high proportion of automation equipment parts, air conditioning parts, etc; The largest sub item of plastic products is miscellaneous, and the other sub items include vinyl flooring, packaging and polymeric MDI; Automobiles and parts are concentrated as a whole, including wheels, body, brake and other parts. We have subdivided the related industries into the core → target products, which are expected to benefit the most, and the related industries are expected to benefit the most.
Risk tip: the Sino US trade war intensifies and the US trade protection measures are overweight; RMB appreciation reduces the competitiveness of export products; The U.S. economy is in recession and the purchasing power of U.S. consumers is declining.
