Policymakers are unsure what to do about a tricky loophole.

The Economist
June 27, 2024

...There are big winners from this tariff avoidance. They include Chinese producers. However, the avoidance also generates a windfall for American consumers. Messrs Khandelwal and Fajgelbaum calculate that, absent the exemption, consumers would have paid $7.8bn more in tariffs in 2021. Include fees and the fact that producers often cut prices just below the threshold to avoid tariffs, and consumers save $22bn a year, or $69 each. Poor households benefit most as they are the biggest consumers of cheap Chinese goods. 

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