Cost of deadweight losses
The second variable used to compute increased household costs, is “deadweight losses.” This factor represents increased expenses of production borne by companies as a result of importing goods from less efficient countries. Companies incur higher costs because they must replace Chinese goods with more expensive sources of supply. The estimate for this cost component is $620 per household.
The $831 total cost estimate per household from the 25% tariffs is the sum of the $620 “deadweight losses” plus the direct $211 cost from the import “tax.”
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