Trump Is Lying - China Does Not Pay The Tariffs (You Do)

Donald Trump wants Americans to believe that the tariffs he has levied on Chinese goods entering the United States is being paid by China. He has repeatedly claimed that is true, but it isn't. The fact is that these tariffs are paid by American importers, and then are passed on to consumers. In other words, it's a hidden tax on the American consumer!

Here's what PolitiFact had to say about Trump's claim:

In remarks at the White House on May 9, Trump said, "So our country can take in $120 billion a year in tariffs, paid for mostly by China, by the way, not by us. A lot of people try and steer it in a different direction. It’s really paid — ultimately, it’s paid for by — largely, by China. And businesses will pour back into our country."

He reiterated that argument in a May 13 tweetstorm, saying that "there is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today." Trump suggested some alternatives — buying from suppliers in a country without tariffs, or buying from an American company.

His repeated message is that Americans shouldn’t worry about the economic impact of his tariffs, couching his claim by saying it's "mostly," "really," "largely" or "ultimately" paid for by China. Despite the hedging words he uses, experts told us the president is wrong to offer that sort of assurance.

"It is inaccurate to say that ‘countries pay’ tariffs on commercial and consumer goods — it is the buyers and sellers that bear the costs," said Ross Burkhart, a Boise State University political scientist. "Purchasers pay the tariff when they buy popular products. Sellers lose market share when their products get priced out of markets.". . .

The idea behind imposing tariffs is to make American companies more competitive with their foreign counterparts. As those companies prosper, the thinking goes, they can hire more workers and pay their employees better. Those workers, in turn, would have more money to spend, and that helps spread those dollars around the economy more broadly.

Economists told us, however, that real-world examples of tariffs working as intended are rare, and consumers of the tariff-levying country are the primary victims of tariffs, by having to pay higher prices.

The federal treasury does get paid when tariffs are levied. But Chinese exporters don’t make the payment. The importers do — usually U.S. companies.

"If the U.S. imposes a tariff on Chinese televisions, the duty is paid to U.S. Customs and Border Protection at the border by a U.S. broker representing a U.S. importer — say, Costco," Howard Gleckman, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, wrote in September. "The Chinese government pays nothing.". . .

When the tariff is small, an importer may elect to keep its prices stable rather than pass the tariff cost along to the consumer. But experts say that’s not the most common decision for the types of tariffs at issue in the current U.S.-China trade war.

"When tariffs are levied at 10 percent, many firms choose to absorb the cost in their margins," said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. This can be done by settling for lower profit margins or cutting costs in some fashion.

"However, with tariffs now scaled up to 25 percent, firms will inevitably pass on some or all of the increase to U.S. consumers," de Bolle said. "That means that U.S. consumers could in some cases pay 25 percent more for a given good than they did before."

Meanwhile, tariffs could mean that producers pay more, as materials that are used to make products sold in the United States rise in price. Those price increases are likely to be passed on to consumers as well. It’s possible that U.S. consumers could find tariff-free products elsewhere, but in many cases, a suitable product may not be available, or may be more expensive or of lower quality.

In addition, tariffs could also produce delays or price spikes that spiral across the economy, since the economy is now tightly interwoven into complex and time-sensitive "supply chains." And any slowdown in the supply chain could mean layoffs for producers and a hit to the broader U.S. economy. . . .

Our ruling

Trump said that tariffs are "paid for mostly by China, by the way, not by us."

China doesn’t pay the initial tariffs — U.S. importers do. In many if not most cases, those costs are passed on to American consumers, whether it’s directly on the products hit by the tariffs or through an impact on U.S. companies who use raw materials hit with tariffs. China could also take a hit over the longer term in its gross domestic product, but experts say the harm to the U.S. economy would be swifter, more certain and potentially bigger.

We rate the statement False.