US Universities Could Lose $1.15 Billion in Tuition Revenue amid Trade War with China, Says Study

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fairly difficult
The researchers of 'Trade Liberalization and Chinese Students in US Higher Education' point out the consequences of trade wars and uncertainty over tariffs on student flow from China to the US for acquiring higher education.
Were trade wars between the United States of America and China not enough to hurt US universities that the Donald Trump administration announced new Immigration and Customs Enforcement rules to keep international students away from pursuing higher education in the country, some experts and academicians are now asking.

A research paper titled 'Trade Liberalization and Chinese Students in US Higher Education' speaks on the consequences of trade wars and uncertainty over tariffs on student flow from China to the US for acquiring higher education.

"This paper takes a new approach as it is couched in the recent political and economic tensions between China and the US, that have led to recent trade wars and restrictions on flows of Chinese residents," says Gaurav Khanna, assistant professor, School of Global Policy and Strategy University of California, San Diego. He is one of the co-authors of the report also written by scholars Kevin Shih, Ariel Weinberger, Mingzhi Xu and Miaojie Yu.

The researchers are of the view that in the last few years, with the trade wars, for the first time growth in students from China has stopped, hurting American universities. "The current guidelines barring the international students having online classes would have the same chilling effect on universities."

Their estimates (without assessing the effect of ICE guidelines) suggest that the trade wars could cost US universities around $1.15 billion in tuition revenue.

The tariff uncertainty

Since 2017, the uncertainty over tariffs and trade wars resurfaced as US-China business relations soured. The policies of trade adopted by the USA showed by mid-2019 average tariffs on Chinese goods increased to nearly 20%.

An agreement in January 2020 reduced tariffs imposed on Chinese goods in exchange for concessions. Yet tariff uncertainty remains significant.

The researchers use their estimates on the effect of tariff uncertainty to make simple inferences on possible future changes in international student flows and services exports if Chinese industries face 20% higher tariffs.

Due to this, the estimates in the report show "enrolment should decline by 640 students in cities that have a population of 10 million".

Given China's urban population (the denominator in the study's outcome) this implies about 30,000 fewer students over 10 years, as per the report.

Assuming average tuition of $40,000 per year implies that, over 10 years, US institutions would lose $1.15 billion in tuition revenue, the research suggests. That is a "3% reduction in educational services…
Eram Agha
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