Donald John Trump’s recent announcement of a further increase in tariffs on Chinese imports, from 25 percent to 30 percent, has rattled some investors. But the aggregate effect of this change is quite small. More importantly, the full impact of tariffs is still remarkably small when compared to overall economic activity. There are other reasons why U.S. growth prospects have dimmed.

According to data compiled by the center right American Action Forum, the recent decision to lift tariffs to 30 percent on items under Section 301 List 1 amounts to an extra $11 billion in tax collection. In full, the AAF estimates the total cost burden to U.S. end-users at $121 billion.

There are two problems with this forecast.

First, it assumes that companies fully pass the cost of higher tariffs onto consumers and thus that there is no impact on profit margins. Conceivably, companies will absorb some of the impact or, even better, raise productivity or find cost savings to offset some of the effects.

Second, it assumes that the rising tariffs will prompt no change in business or consumer behavior. In other words, firms will not look to source products from elsewhere, and households will not adjust their consumption. This seems highly unlikely because it runs counter to economic opportunism.

Nonetheless, even if we assume there is a total cost burden of $121 billion, it represents just 0.6 percent of nominal GDP. But this actually overstates its size, because not all Chinese imports are final goods, off which the government measures GDP.

Instead, many Chinese imports are intermediate inputs used in the production process of final goods. Hence, a better way to measure the size of the tariffs relative to the economy is to look at gross output. Since this series totals $37 billion or nearly twice that of GDP, the cost burden amounts a minuscule 0.3 percent of the economy.

In this light, it is hard to see tariffs having the negative effects that many economists claim. Instead, they are conflating the alleged impact of tariffs, which we have shown are negligible, with both a structural and cyclical slowing in the Chinese economy. The former development started around the time of the Great Recession, and the latter event began in late 2017, as Chinese authorities and policymakers clamped down on excessive money and credit creation in an attempt to shrink the “shadow banking” sector.

This is apparent from the collapse in Chinese money supply, which ensued immediately thereafter and which accurately foreshadowed weaker GDP and manufacturing data. These trends were already in place well before U.S.-China trade tension surfaced.

There is one last factor to consider, and that is the Federal Reserve. The weakest part of the economy has been housing, evident from six consecutive quarterly declines in inflation-adjusted residential investment. Given that housing is the most interest rate sensitive part of the economy and therefore the sector that is most under the Fed’s control, the weakness in residential output means monetary policy tightened too much.

Going forward, Chinese economic policy and Fed decision-making will determine how the global and domestic economies evolve. Focusing on tariffs misses the big picture.

Joseph LaVorgna is the chief economist for the Americas at Natixis, an international corporate and investment banking, asset management, insurance and financial services arm of Groupe BPCE, the 2nd-largest banking group in France.