Tariffs suck. They do not work and will only cause harm for the manufacturer and consumer.
President Donald Trump’s economic adviser Larry Kudlow broke from his boss on Sunday when he agreed that tariffs would hurt both the US and China after Trump increased tariffs.
To make matters worse, China imposed tariffs on $60 million worth of US goods on Monday.
On Fox News Sunday, host Chris Wallace mentioned to Kudlow that Trump insisted the 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 to steer it in a different direction. It’s really paid – ultimately, it’s paid for by – largely by China.”
Wallace pointed out this is not true, which Kudlow admitted:
“But, Larry, that isn’t true,” Wallace told Kudlow. “It’s not China that pays tariffs. It’s the American importers, the American companies that pay what, in effect, is a tax increase and often times passes it on to U.S. consumers.””Fair enough,” Kudlow said. “In fact, both sides will pay. Both sides will pay in these things.”
Last week, Trump’s administration “increased the taxes on $200 billion worth of imported Chinese goods from 10% to 25% and started the process to impose tariffs on all remaining imports from China, approximately $300 billion of goods, last week to try to pressure China to reaffirm previous pledges made previously in trade talks.”
Despite the fact that Kudlow admitted the truth, he explained to Wallace the risk is worth it since our economy continues to grow stronger.
As Kudlow spoke on Fox News, Sen. Rand Paul (R-KY) expressed his disgust for tariffs on ABC’s This Week. From Fox News:
“I know of a big prominent company in Kentucky that said the tax cuts significantly helped them, but that the tariffs are almost equal in punishing them,” Paul said during an interview on ABC’s “This Week.” “I’ve talked to the administration about this, I said the great benefits of the tax cut, which has low unemployment and incredible economic growth, could be erased by this tariff war.”Paul added: “The president is playing a negotiating battle with the Chinese and I think he thinks at this point he can’t back out…but I still have advised the administration: get this done, because the longer we’re involved in a tariff battle or a trade war, the better chance there is we could actually enter into a recession because of it.”
This isn’t hard to understand. In order for someone to stay in business they have to make a profit. If they have to pay more in taxes they will raise prices on products, which goes to the consumer.
Others agreed with Paul while effects of tariffs have already shown up:
In response to the tariffs on $200 billion of goods, China slapped its own tariffs on $60 billion on US goods, which includes animal products, frozen produce, seasonings, baking condiments, chemicals, and vodka. This is an increase of 20% to 25% from 10%.
China does not have the ability to match our tariffs because they do not import anywhere near what we import from them. China also “did not specify the dollar value of goods in each of the four categories.”
From The New York Times:
American companies are fearful that China might resort to other methods to retaliate, beyond tariffs. Hu Xijin, the well-connected chief editor of the Global Times, a tabloid directly owned by the Chinese Communist Party, tweeted on Monday evening that China might halt purchase of American agricultural and energy products and Boeing aircraft and restrict offerings of American services in China. He also cited unidentified Chinese scholars who had speculated that China might sell some of its large holdings of Treasuries.The question now is whether another round of tit-for-tat tariffs cements a prolonged economic struggle between the United States and China. Since Mr. Trump was elected, the two sides have repeatedly seemed close to a deal only for it to fall apart. Commerce Secretary Wilbur Ross seemed to have the outlines of a deal in 2017. Treasury Secretary Steven Mnuchin talked of a deal being at hand a year ago.
However, both sides have a small window to come to an agreement. The Chinese tariffs will not start until June 1. Ours kicked in last Friday.
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