Top WH adviser Kudlow admits US consumers pay for tariffs

WASHINGTON (AP) — The White House’s top economic adviser acknowledged Sunday that U.S. consumers and businesses pay the tariffs that the Trump administration has imposed on billions of dollars of Chinese goods, even as President Trump himself insisted in a tweet, incorrectly, that China pays.

“Yes, I don’t disagree with that,” said Larry Kudlow, the head of the president’s National Kudlow Economic

Council, when Chris Wallace, host of “Fox News Sunday,” asked him, “It’s U.S. businesses and U.S. consumers who pay, correct?”

Kudlow added, “Both sides will pay,” but he stipulated that China “will suffer (economic) losses” from reduced exports to the U.S., 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 United States from China. Yet almost no economist has agreed with Trump’s view and fact-checkers routinely brand Trump’s assertion false and point out that American 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 U.S. economy, though he downplayed the impact.

On Friday, the Trump administration raised duties on $200 billion of Chinese imports to 25% from 10%, after charging that China had backtracked on commitments it made earlier in the talks. The administration has already hit $50 billion of additional Chinese goods with 25% duties.

Later Sunday, Trump reiterated his view in a tweet: “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, pointed out that many goods made in China aren’t manufactured elsewhere. That’s why many U.S. 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 $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.

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