Rep. Axne Requests Treasury Dept Data on Consumer Cost of Tariffs
WASHINGTON – Following Treasury Secretary Steven Mnuchin’s testimony at yesterday’s House Financial Services Committee hearing, U.S. Rep. Cindy Axne (D-IA-03), a member of the House Financial Services Committee, sent a letter requesting the Treasury Department provide Congress with data regarding the Administration’s claim that Chinese tariffs will not increase costs on American consumers.
Today, the New York Federal Reserve Bank published reports stating that tariffs will cost the average American household $831 per year. At yesterday’s hearing, Sec. Mnuchin told Rep. Axne that he “does not necessarily agree” that American consumers will pay more because of Chinese tariffs.
In a letter sent today to Treasury Secretary Steven Mnuchin, Rep. Axne wrote, “While it appears beyond evident that consumers will pay this price, the Administration’s position is that China will foot the bill.”
In order to understand the rationale behind this position, Rep. Axne requested the Treasury Department provide written responses to a series of questions regarding the extent and scope of Treasury Department research and data on the impact tariffs will have on American consumers within ten business days.
Axne added: “I would like to know the full extent of economic impact research conducted by the Department of Treasury prior to the Administration’s implementing a 25% tariff on $250 billion per year of Chinese imports. Iowans deserve to know that their well-being and economic security is a consideration in the implementation of Administration policies.”
A copy of the letter is available here. Text of the letter is available below.
Thursday, May 23, 2019
Honorable Secretary Steven Mnuchin
U.S. Department of the Treasury
1500 Pennsylvania Ave NW
Washington, DC 20220
Dear Secretary Mnuchin,
Thank you for speaking at the U.S. House Financial Services Committee hearing. I would like to follow up on my questions regarding the extent and scope of research the Department of Treasury has conducted on the impact the Administration’s tariffs will have on the average American family.
At the hearing, I asked if Americans will pay more as a result of the Administration’s tariffs on Chinese imports. You responded saying that you do not “necessarily” agree that American consumers will pay more. However, the United States has had tariffs on Chinese imports for more than ten months, in addition to tariffs on imports from other countries, which have already led to price increases on Americans.
When I asked if you had conducted research in order to assess the economic impact of these tariffs, you stated, “I have just spoken to all of the major companies that provide consumer goods.” I certainly value the input of executives at large retailers, but I’m concerned that your research may not have focused sufficiently on the impact of these tariffs on everyday Americans.
Leading economists at the Federal Reserve Bank of New York, Princeton University, Columbia University, the Peterson Institute for International Economics and the Tax Policy Center have estimated that the tariffs will drive up prices, costing the average American family more than $500 a year. Research released this morning puts the per household cost at $831 per year or more than $100 billion total to US consumers. Also, last week on Fox News, Larry Kudlow, the Director of the National Economic Council agreed that it’s U.S. businesses and consumers who are paying these tariffs. If your Administration follows through on increasing tariffs on the other $300 billion of imports, this could cost American families $2,000 per year.
Additionally, many of our largest retailers, including Walmart, have publicly stated they will increase consumer prices in order to offset the cost of these tariffs. Last summer, when Apple had some of their products included in the proposed list of tariffed goods, they wrote to the Administration, “Because all tariffs ultimately show up as a tax on US consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives.” Subsequently, the items they mentioned were removed from the final list which went into effect on September 24th, 2018.
While it appears beyond evident that consumers will pay this price, the Administration’s position is that China will foot the bill. In order to better understand the rationale behind this position, I seek answers and clarification on the following questions:
- We have had tariffs on Chinese imports in place for more than 10 months. What has your research shown about their impact on consumer prices?
- Do you agree with leading economists that the current level of tariffs will increase prices to consumers by at least $500 per year per household? If so, do you think this is a significant cost?
- If you do not agree with that cost estimate, please provide any research supporting that claim, including specific estimates of the cost to the median American household. In addition, please provide any research on the cost of these tariffs conducted by the Treasury Department.
- Did you conduct an impact assessment which included a distributional analysis of the impact of these tariffs?
- What assessments of the impact of Chinese tariffs did the Treasury Department conduct prior to making the determination to raise the tariffs on May 10? Did these assessments include an evaluation of the impact on both the US economy and the cost to the average American household?
- If so, why was information from those assessments not shared with Congress and the public? If not, please provide an explanation for why it was not conducted prior to increasing tariffs, and an estimate for when this analysis will be completed.
- Most economic analysis views a widespread tariff as being regressive, much like a sales tax. Does your analysis agree?
Regarding your stated conversations with major companies about the impact of the tariffs:
- You stated that you spoke with “all the major companies that provide consumer goods.” Which major companies did you speak with and when?
- Did these companies provide you with information that is different from their public announcement that they would raise consumer prices?
- You stated that the Treasury Department will likely issue exemptions. Can you provide more information on how the decisions are made regarding what products receive exemptions? How are these decisions different for finished products as opposed to inputs?
I would like to know the full extent of economic impact research conducted by the Department of Treasury prior to the Administration’s implementing a 25% tariff on $250 billion per year of Chinese imports.
Iowans deserve to know that their well-being and economic security is a consideration in the implementation of Administration policies.