ITIF Cautions Against Tariffs on Capital Goods

June 15, 2018

WASHINGTON—Following the administration’s decision to impose additional tariffs on capital goods from China under Section 301, the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, today released the following statement from its president, Robert D. Atkinson:

While it’s well past time to confront China’s egregious mercantilism, the administration should be careful not to inadvertently put U.S. productivity growth in jeopardy. An increase in prices brought about by tariffs on capital goods would reduce investment, thereby lowering already anemic rates of productivity growth. Rather than impose tariffs on capital goods, the United States should rely on other other measures while also working with like-minded allies to counter unfair Chinese trade practices.

For additional background on the unintended consequences of ICT tariffs, see ITIF’s recent report, “Why Tariffs on Chinese ICT Imports Would Harm the U.S. Economy,” which found that a broad 25 percent tariff on Chinese ICT products would slow U.S. growth by $332 billion over the next 10 years, and a 10 percent tariff would cost the U.S. economy $163 billion over 10 years.