According to San Francisco Fed senior economist Galina Hale and research advisor Bart Hobijn, the share of Chinese produced goods in U.S. consumption is not nearly as high as is widely believed.
Surveying data from the Commerce Department, Bureau of Labor Statistics and the Census Bureau, the pair finds that a full 88.5% of goods and services consumed by U.S. households is produced domestically. Of the 11.5% that is imported, goods made in China account for barely more than a quarter ─ or 2.7% of total U.S. consumption spending.
Obviously, if a pair of sneakers made in China costs $70 in the U.S., not all of that retail price goes to the Chinese manufacturer. In fact, the bulk of the retail price pays for the transportation of the sneakers to the U.S, rent for the store where they are sold, profits for shareholders of the U.S. retailer, and the cost of marketing the sneakers. These costs include the salaries, wages and benefits paid to U.S. workers and managers who staff these operations.
‘On average, of every dollar spent on an item labeled ‘Made in China,’ 55 cents go for services produced in the U.S.,’ Ms. Hale and Mr. Hobijn write. ‘In other words, the U.S. content of ‘Made in China’ is about 55%. The fact that the U.S. content of Chinese goods is much higher than for imports as a whole is mainly due to higher retail and wholesale margins on consumer electronics and clothing than on most other goods and services.’
It gets more complicated. Chinese made parts also go into the 88.5% of U.S. consumption spending devoted to goods made in the U.S. Adding it all up, the researchers conclude that the total share of ‘made in China’ goods in U.S. household consumption is just 1.9%.