President Trump keeps claiming that the additional tariffs placed on Chinese products will be paid by China, but, as White House Economic Adviser Larry Kudlow admitted today, they are actually paid by U.S. importers of Chinese goods and, ultimately, by U.S. consumers. Kudlow made the comments today in an interview with Chris Wallace on Fox News. Wallace is one of those few on Fox News who do not simply toe the line on being pro-Trump, but actually ask critical questions.
Wallace said, “It’s not China that pays tariffs. It’s the American importers, the American companies that pay what in effect is a tax increase and oftentimes passes it on to U.S. consumers,” according to The Hill, to which Kudlow replied, in part, “Fair enough…”. Wallace pressed Kudlow further, saying, “They (the Chinese) may suffer consequences, but it’s U.S. businesses and U.S. consumers who pay, correct?”, to which Kudlow answered that he would not disagree with that characterization, clearly an effort on Kudlow’s part to be vague, but it nonetheless showed he agreed with Wallace’s characterization. Trump on the other hand continues to perpetuate the myth that his tariffs on China are a cost born almost solely by the Chinese, tweeting about his recent additional tariffs that, “Talks with China continue in a very congenial manner – there is absolutely no need to rush – as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products.” According to The Hill:
White House economic adviser Larry Kudlow on Sunday contradicted President Trump, saying he didn’t disagree with the characterization that China is not paying the tariffs on goods coming into the U.S. …New tariffs are not paid by the Chinese government but rather U.S. importers of impacted Chinese goods. Companies normally pass that cost on to consumers by raising prices, The Associated Press reported. … with (Fox News’ Chris) Wallace interjecting to point out that “if it’s a tariff on goods coming into the country, the Chinese aren’t paying.” “No, but the Chinese will suffer [gross domestic product] losses and so forth with respect to a diminishing export market and goods that they may need,” Kudlow said. Wallace replied by noting that Trump has said China pays the tariffs.”They may suffer consequences, but it’s U.S. businesses and U.S. consumers who pay, correct?” he (Wallace) asked. Kudlow responded by saying he didn’t disagree with that characterization, adding that both sides will suffer because of new tariffs.
Farmers, manufacturers, and consumers have all complained of economic harm from President Trump’s tariffs, yet Trump continues to spin an untrue story that the costs are paid almost exclusively by the countries involved. Trump also had the completely unrealistic expectation that countries against which he imposed tariffs would not respond in kind with retaliatory tariffs, about which Trump has been wrong in every instance. Even Trump’s White House Economic Adviser Larry Kudlow contradicts Trump’s tale of who is actually paying for these tariffs, but Kudlow may have made that contradiction today in subtle enough wording that it will be lost on Trump.