Larry Kudlow acknowledges U.S. consumers, not China, pay for tariffs on imports |
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Larry Kudlow acknowledges U.S. consumers, not China, pay for tariffs on imports

The Washington Post
Director of the National Economic Council Larry Kudlow talks to the media outside the the White House on May 3.

WASHINGTON — 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.”

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.”

He also claimed that tariffs will “bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind.”

And Saturday, Trump suggested that the United States was “collecting” tariffs from China.

“Would be wise for them to act now, but love collecting BIG TARIFFS!” Trump said in a tweet.

Trump insisted Sunday night that the tariffs would be advantageous for the U.S. despite what Kudlow said.

“We are right where we want to be with China. Remember, they broke the deal with us & tried to renegotiate. 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,” the president tweeted.

Trump has argued that trade wars are “good and easy to win” and maintains that his tariffs are a useful way to force China to the negotiating table. But Democrats and a growing number of Republicans have voiced concern that Trump’s tariffs could undermine the past several years of robust economic growth.

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.”

In an appearance on CBS News’s “Face the Nation,” Henry Paulson, who was treasury secretary under President George W. Bush, said that although “we don’t have many good tools” to put economic pressure on China, tariffs are not an ideal choice.

“They’re a tax on the American consumer,” said Paulson, who is chairman of the Paulson Institute and a former chief executive of Goldman Sachs. He added: “Will it hurt us? If this persists too long, it will. There’ll be a cost to it.”

Paulson said he would “prefer the tactic of working with our allies to put pressure” on China but described that approach as imperfect as well because U.S. allies are often risk-averse when it comes to dealing with the Chinese.

Sen. Kamala Harris, D-Calif., a 2020 presidential candidate, said on CNN’s “State of the Union” that the Trump administration has “failed to understand that we are stronger when we work with our allies on every issue, China included.”

“This president seems to believe and has a preference for conducting trade policy, economic policy, foreign policy by tweet,” Harris said. “And that’s irresponsible.”

Among the lawmakers defending Trump on Sunday was Sen. Lindsey Graham, R-S.C.

“I’m 100 percent with the president,” Graham said on Fox News Channel’s “Sunday Morning Futures.”

Graham argued that Trump is “trying to break the stranglehold China has” on the global supply chain, and that while American consumers will pay more, “eventually, China is going to get hurt more than us.”

“When you put tariffs on products coming out of China, it makes other countries a cheaper place to do business, which eventually moves market share away from China,” Graham said. “This is what Trump’s trying to do.”

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