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US-China trade

Forty percent of Americans say they won’t buy “Made In China,” do they mean it?


Published 04 June 2020

More Americans say they won't purchase US imports from China, and China is no longer America's top source of imports. But are Americans really willing to pay more?

In a survey last month of more than 1,000 American adults, 40 percent said, “I will not purchase products made in China.” And for the first time since 2002, China is no longer consistently our top source of imports. Are we putting our money where our mouths are?

China purchase decision poll

Here’s a thought experiment.

Imports are approximately 15 percent of total US consumption. China’s share of US imports is about 21 percent, so our imports from China represent 3.15 percent of GDP. Forty percent of that is 1.26 percent. In a straight calculation, if 40 percent of our imports from China disappeared, then 1.26 percent of GDP would also disappear.

Of course it’s not so straightforward. More realistically, those American consumers and producers who are trying to stop buying from China have some decisions to make. Do I buy imported items from another country or can they instead be made here at home, albeit likely at greater expense? Am I willing to pay more?

Willing to pay more question

Ripple effect of US imports from China

There are also indirect effects. Data from the Organization for Economic Cooperation and Development show that 15.5 percent of our exports are produced or manufactured using foreign components. Of course some of that is from China and would have to be sourced differently, possibly at greater expense.

And in other potential knock-on effects, what if China in turn stopped buying from us overnight? China’s share of US exports is 7.2 percent and the US export share of GDP is 12.2 percent. Such a sea change could affect close to one percent of our GDP. American exporters would have to find buyers in other export markets (albeit potentially at a lower price because if buyers in other countries were willing to pay more than China, we’d be selling there already instead).

Labeling Q

So the question is, can we believe those 1,000 adults in the survey who say they won’t buy “Made in China”? There is a well-known response bias in surveys that occurs when survey respondents are emotive about the subject. In other words, people often say one thing but do another.

American views on China have been steadily declining for a few years and have further deteriorated with the backlash over the COVID-19 pandemic. But if history is our guide, we should not expect people to pay much extra to shun Chinese-made goods. Shoppers are price sensitive, especially lower-income consumers. And as we climb out of our pandemic-induced economic hole, Americans will be shopping for deals.

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Author

Christine McDaniel

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

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