Economic advisor, Larry Kudlow, bowed to repeated questioning by Fox News Sunday anchor Chris Wallace, admitting that what Trump has been telling the American people is not exactly the truth, reports the Washington Post.
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.”
“Fair enough,” Kudlow replied. “In fact, both sides will pay. Both sides will pay in these things.” Pressed again by Wallace, Kudlow acknowledged that China does not actually “pay” the tariffs.
.@larry_kudlow talks to Chris about Trump's trade policies with China impacting U.S. farmers pic.twitter.com/22KheD2zsG
— FoxNewsSunday (@FoxNewsSunday) May 12, 2019
“No, but the Chinese will suffer GDP losses and so forth with respect to a diminishing export market,” Kudlow said, adding, “This is a risk we should and can take without damaging our economy in any appreciable way.”
The most recent round of trade talks with China ended on Friday with no final agreement being made between the two countries. In the meantime, Trump spent his day defending his decision to more than double tariffs on $200 billion worth of Chinese imports in tweets.
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. These massive payments go directly to the Treasury of the U.S….
— Donald J. Trump (@realDonaldTrump) May 10, 2019
He also claimed that tariffs will “bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind.”
And Saturday, Trump suggested that the United States was “collecting” tariffs from China. “Would be wise for them to act now, but love collecting BIG TARIFFS!” Trump said in a tweet.
The thing is – If anyone is dumb enough to still believe what Trump is saying – it is because they wouldn’t know the truth if it hit them in the face. What our Twitter-in-Chief is saying is just not true.
In fact, U.S. importers are responsible for the duties, and ultimately U.S. businesses and consumers pay through higher costs, according to a study published in March by economists from the Federal Reserve Bank of New York, Princeton University and Columbia University.
“Our results imply that the tariff revenue the U.S. is now collecting is insufficient to compensate the losses being born by the consumers of imports,” the study concludes.
A separate paper published in March by economists Pinelopi Goldberg, the World Bank’s chief economist, Pablo Fajgelbaum of UCLA, Patrick Kennedy of the University of California, Berkeley, and Amit Khandelwal of Columbia Business School also found that consumers and U.S. companies were paying most of the costs of Trump’s tariffs.
Bloomberg reports this study went a step further: After factoring in the retaliation by other countries, it concluded the main victims of Trump’s trade wars had been farmers and blue-collar workers in areas that supported Trump in the 2016 election.
“Workers in very Republican counties bore the brunt of the costs of the trade war, in part because retaliations disproportionately targeted agricultural sectors,” the authors wrote.
Even Senator Rand Paul (R-Ky.), is worried about the tariffs. “The longer we’re involved in a tariff battle or a trade war, the better chance there is that we could actually enter into a recession because of it,” Paul said on ABC’s “This Week.”
