U.S. firms, not China, pay tariff costs, IMF says

WASHINGTON— Companies in the U.S. are paying almost all the costs from Donald Trump’s tariffs on Chinese imports, IMF researchers said in findings that contradict the U.S. president’s assertions that China is footing the bill.

IMF researchers found “tariff revenue collected has been borne almost entirely by U.S. importers,” according to the International Monetary Fund’s blog post released Thursday.

“Some of these tariffs have been passed on to U.S. consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins.”

The report says what most private economists have argued for months: China doesn’t pay U.S. tariffs, American consumers and companies do.

“Consumers in the U.S. and China are unequivocally the losers from trade tensions,” the IMF paper said. It’s rare for the IMF to disagree with its largest shareholder, and the paper was released just as the rhetoric in Trump’s trade war with China reaches a boiling point.

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods,” Trump tweeted May 5.

Trade talks between Beijing and Washington stalled this month as Trump accused China of backing out of a deal that was taking shape.

In response, Trump increased levies on $200 billion (U.S.) in Chinese imports to 25 per cent from 10 per cent, prompting retaliation from Beijing.