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Washington Post - May 12, 2019

National Economic Council Director Larry Kudlow acknowledged Sunday that American consumers end up paying for the administration’s tariffs on Chinese imports, contradicting President Trump’s repeated inaccurate claim that the Chinese foot the bill.

In an appearance on “Fox News Sunday” two days after U.S.-China trade talks ended with no news of a deal, Kudlow was asked by host Chris Wallace about Trump’s claim.

“It’s not China that pays tariffs,” Wallace said. “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.

“No, but the Chinese will suffer GDP losses and so forth with respect to a diminishing export market,” he said.

Kudlow added that “both sides will suffer on this.”

[Fact Checker: Trump’s repeated claim that China is paying ‘billions’ in tariffs to the Treasury]

The latest round of trade talks ended Friday with no announcement of an agreement. This followed tweets from Trump defending his decision to more than double tariffs on $200 billion worth of Chinese imports.

“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,” Trump tweeted. “These massive payments go directly to the Treasury of the U.S.”

The effect is being felt by industries across the country, from farmers in Iowa to auto manufacturers in Tennessee. Financial markets also have taken a dive amid the trade standoff, with the Standard & Poor’s 500 index losing 2.18 percent last week, its worst week of the year.

On Sunday, figures on both sides of the aisle criticized Trump’s handling of the China trade talks.

Sen. Rand Paul (R-Ky.), an ally of Trump, said on ABC News’s “This Week” that he is worried about the effect the tariffs will have on the U.S. economy.

Paul told host George Stephanopoulos that he is “very concerned” that Trump may enact permanent tariffs that will wind up hurting U.S. consumers, farmers and manufacturers.

“I know of a big company that told me that the tax cuts specifically helped them but that the tariffs are almost equal in punishing them,” Paul said, referring to the Republican-led tax overhaul passed in 2017. “The farmers in Kentucky are concerned about the tariffs, and I’ve talked to the administration about this. . . . 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.” ...
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