Tue, May 14, 2019 - Page 10 News List

Kudlow admits Americans pay tariffs

IMPORT DUTY:Donald Trump has insisted that Chinese firms pay for the US tariffs, a claim challenged by economists, who say that US firms and consumers foot the bill

AP, WASHINGTON

US National Economic Council Director Larry Kudlow has acknowledged that US consumers and businesses pay the tariffs that US President Donald Trump administration has imposed on billions of US dollars of Chinese goods, even as Trump insisted on Twitter, incorrectly, that China pays.

Chris Wallace, host of Fox News Sunday, asked him: “It’s US businesses and US consumers who pay, correct?”

“Yes, I don’t disagree with that,” Kudlow said.

“Both sides will pay,” he said, but added that China “will suffer [economic] losses” from reduced exports to the US, not from paying the tariffs.

Kudlow’s admission contradicts many of Trump’s comments and tweets to the effect that Chinese companies pay the tariffs in what amounts, in the president’s view, to a massive transfer of wealth to the US from China.

Yet almost no economist has agreed with Trump’s view and fact-checkers routinely brand Trump’s assertion false and say that US importers of goods from China pay the tariffs.

Trump has also asserted that trade wars are “easy to win,” but Kudlow accepted that they come with costs for the US economy, although he downplayed the impact.

On Friday, the Trump administration raised duties on US$200 billion of Chinese imports to 25 percent from 10 percent, after saying that China had backtracked on commitments it made earlier in the talks.

The Trump administration has already hit US$50 billion of additional Chinese goods with 25 percent duties.

Later on Sunday, Trump reiterated his view on Twitter: “We will be taking in Tens of Billions of Dollars in Tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-Tariffed countries.”

Yet Carl Weinberg, chief international economist at High Frequency Economics, a forecasting firm, said that many goods made in China are not manufactured elsewhere.

That is why many US importers have little choice but to pay the tariff.

“So if you need that new iPad, it is you who will be paying the import duty, not some worker in China,” Weinberg wrote in a research note.

Trump has also threatened to impose import taxes on the remaining US$300 billion in Chinese imports, a step that Kudlow estimated would take several months to implement.

Imposing those tariffs would impact a wide range of consumer goods — clothes, shoes, toys and electronics such as iPhones — that have been mostly exempted so far and could prompt steep cost increases that many Americans would likely notice.

However, Kudlow said that the economic impact of placing tariffs on all Chinese imports would be to cut economic growth by 0.2 percentage points, “a very modest number.”

Independent economists, though, think the impact would be larger. Gregory Daco, an economist at Oxford Economics, estimated that it would reduce US growth by 0.5 percentage points and cost 300,000 jobs.

Kudlow also said the US is awaiting retaliation from China over the increased tariffs, after talks in Washington ended on Friday without a deal.

Both sides have indicated that future talks are likely.

Kudlow on Sunday said that Chinese officials have invited US Trade Representative Robert Lighthizer and US Secretary of the Treasury Steven Mnuchin to visit Beijing, although nothing has been scheduled.

Kudlow also said that Trump and Chinese President Xi Jinping (習近平) might meet late next month at the G20 conference in Japan.

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