Donald Trump has levied additional tariffs on China, after recent trade talks between the U.S. and China ended with no deal. On Friday, May 10, Trump raised tariffs from 10 percent to 25 percent on $200 billion worth of products imported from China.
Trump maintains that the new tariffs will mainly cost China, not the U.S. “The tariffs paid to the U.S.A. have had little impact on product cost, mostly borne by China,” he tweeted.
“Our country can take in $120 billion a year in tariffs, paid for mostly by China, by the way, not by us,” Trump said. “A lot of people try to steer it in a different direction. Ultimately it’s paid for largely by China.”
Many economists disagree, however.
Even White House Chief Economic Adviser Larry Kudlow essentially disagreed with Trump during an interview with Chris Wallace of Fox News Sunday. When questioned about the new tariffs, Kudlow admitted that the increased tariffs will not only have consequences for the Chinese, but also for U.S. consumers and businesses.
“It’s not China that pays the tariffs, it’s the American importers, the American companies that pay what, in effect, is a tax increase and often passes it off to U.S. consumers,” probed Wallace.
“Fair enough,” responded Kudlow. “In fact, both sides will pay… The Chinese will suffer GDP losses and so forth…”
“[China] may suffer consequences, but it’s U.S. consumers and businesses who pay, correct?” Asked Wallace.
“Yes, to some extent,” Kudlow said. “I don’t disagree with that.”
According to experts from Princeton and Columbia Universities, as well as experts from the Federal Reserve Bank of New York, the tariffs imposed on China in 2018 have already increased American consumer costs by $1.4 billion per month.
Additionally, that round of tariffs on crops such as corn and soybeans that are exported to China made those markets for corn and soybeans difficult or impossible for many farmers. Tariffs on steel and aluminum have increased the prices of farm machinery, as well as appliances.
Meanwhile, business owners and manufacturers are preparing for the impact of the newer, steeper tariffs. At 25 percent, the new tariffs will have a deeper and wider impact on the prices of goods in the U.S., from finished goods imported from China, to imported raw materials and finished goods made with those raw materials in the U.S.
“The latest round of tariffs will add another $500 a year in costs for the average American household…And that could grow,” says economics professor Katheryn Ross of the University of California at Davis.
Indeed, Trump continues his threat to broaden tariffs to apply to all Chinese imports.
What Trump’s trade war with China means for American consumers |
PBS NewsHour [2019-05-13]
Larry Kudlow on rising tensions and Trump’s China strategy |
Fox News [2019-05-12]