President Donald Trump’s tariff hike on Chinese imports will effectively end most trade between the U.S. and China, according to economist Erica York.
“It depends on how narrowly the tariff is applied or how broadly it’s applied, but generally if you get north of a triple-digit tariff, you are cutting off most trade,”
said York, vice president of federal tax policy at the Tax Foundation, speaking on CNBC’s The Exchange.
She added that some products without substitutes might still be imported, but “for the most part, that cuts it off.”
Key Points
- Economist Erica York stated that the U.S. cumulative tariff rate on China, now at 145%, will cut off most trade between the two countries.
- The Tax Foundation estimates these tariffs could lead to over $170 billion in additional federal tax revenue for 2025.
- York made the remarks as markets reversed some gains from Wednesday’s rally.
Market Reaction
York’s comments came as markets erased much of Wednesday’s gains. A White House official confirmed to CNBC that the new U.S. tariff rate on Chinese goods now stands at 145%.
This includes:
- A hike from 84% to 125% announced Wednesday
- An additional 20% fentanyl-related duty implemented earlier
Ongoing Uncertainty
York warned the situation is far from over:
“It’s not like the threat went away entirely,”
noting that clarity is unlikely before July, when the temporary tariff reversal is scheduled to end.
On Wednesday, Trump temporarily reduced tariffs on most other countries to 10% for 90 days, excluding China. In a cabinet meeting Thursday, he did not rule out extending the pause.
Even with the pause, Trump’s protectionist stance remains the strongest in decades.
“It’ll take the average tariff rate to highs not seen since the 1940s,” York emphasized.
“It’s a huge economic hit. It’s clearly not a good path.”
Economic Impact
The Tax Foundation predicts the new tariffs will bring in $171.6 billion in federal tax revenues this year.
That would make it the biggest U.S. tax increase since 1993, larger than those under George H.W. Bush and Barack Obama.
China’s Response
China responded swiftly. Before Trump’s pause announcement, China increased retaliatory tariffs on U.S. goods from 34% to 84%, effective Thursday.
