US Consumers Are Paying For Trump's China Tariffs, White House Adviser Kudlow Confirms

President Donald Trump’s unfounded claim his tariffs on Chinese goods are being paid by the Chinese government to the U.S. was denied by his own Director of the National Economic Council, Larry Kudlow.

In an interview on Fox News Sunday, Kudlow acknowledged the Chinese government doesn’t directly pay tariffs on goods coming into the U.S. from China. Instead, American importers pay these higher duties to the U.S. government. Importers then recoup the higher tariff taxes by passing the cost on to U.S. consumers in the form of higher prices for goods and commodities.

Trump, however, has kept insisting the Chinese government is paying for these tariff hikes. Trump’s argument has long been dismissed as an outright falsehood by many economists.

“It’s not China that pays tariffs,” said host Chris Wallace. “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,” replied Kudlow. “In fact, both sides will pay. Both sides will pay in these things.”

Kudlow pointed out China doesn’t actually pay the tariffs.

Kudlow also told Wallace “both sides will suffer on this.” He contended, however, China will suffer significant GDP losses as export markets are hit. He claims the hit to U.S. GDP won’t be substantial since the economy is in terrific shape.

Kudlow avers this is a risk the U.S. should and can take without damaging our economy in any appreciable way.

On Saturday, Trump followed-up his doubling of Chinese tariffs to 25 percent from 10 percent on May 10 with a new tweet demanding China should “act now” to wrap up a trade deal with the U.S. He said “far worse” terms will be offered to them when he begins his second term as president.

Trump then again repeated his falsce claim U.S. was “collecting” big tariffs from China.

“Would be wise for them to act now, but love collecting BIG TARIFFS!” he tweeted.

Economists point out the burden of higher tariffs will be borne by buyers of Chinese-made products, which are American consumers. Trump’s new tariffs will cause every American household to spend an additional $800 annually, according to estimates from Oxford Economics.

Federal data also belies Trump’s claim the government will earn $100 billion from the new taxes. It shows that in the latest fiscal year, only $41 billion --about 1% -- of $3.3 trillion in revenues raised by the federal government came from customs duties.

Trump keeps insisting the new tariff revenues will hit $100 billion, which is more than double the current annual level of customs duties. U.S. duties are expected to reach this level only in 2027.

China will retaliate for Trump’s May 10 tariff hike. Its new tariffs on U.S. goods are expected this week.