A new research study shows that American trade has shifted away from China due to policies implemented by the administrations of former President Donald Trump and current President Joe Biden. However, it noted that the United States' reliance on China-related supply chains has not decreased as a result of this shift, causing consumers to face rising prices. The study was presented by Laura Alfaro, an economist at Harvard Business School, and Davin Chor, an associate professor at the Tuck School of Business at Dartmouth, during the annual meeting of central bank governors and economic experts in Jackson Hole, Wyoming.
The study pointed out that despite concerns about a decline in globalization after the COVID-19 pandemic and the Russian invasion of Ukraine, total trade "remained strong at just under 60 percent of the global GDP instead of collapsing." It stated that U.S. tariffs on Chinese goods, along with recently issued industrial policies and the pandemic, have led to a "significant reallocation" in supply chain activities, with direct U.S. imports from China dropping from 21.6 percent in 2016 to 16.5 percent last year of total U.S. imports. The study asserts that the shift in U.S. trade away from China has resulted in higher prices for consumers without any compensatory measures such as improved manufacturing efficiency in the United States.
