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Trump’s China tariffs – Paid by U.S. importers, not by China

Trump’s China tariffs – Paid by U.S. importers, not by China

CHICAGO : With U.S. President Donald Trump’s announcement on Thursday of tariffs on another $300 billion of Chinese imports, nearly all goods from China will be subject to import taxes, and Trump says they generate billions of dollars in revenues for the U.S. Treasury from China.

But that is not how tariffs work. China’s government and companies in China do not pay U.S. tariffs directly. Tariffs are a tax on imported products and are paid by U.S.-registered firms to U.S. customs when goods enter the United States.

Importers often pass the costs of tariffs on to customers – manufacturers and consumers in the United States – by raising their prices. U.S. business executives and economists say U.S. consumers foot much of the tariff bill.

That was why, immediately after Trump announced his decision, U.S. retailers blasted the move as “another tax increase on American businesses and consumers,” which they warned would threaten U.S. jobs and raise costs for American families.

The new levies will hit a wide swath of consumer goods from cell phones and laptop computers to toys and footwear.

Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said the new tariffs would hit U.S. consumers far harder than Chinese manufacturers, who produce 42% of apparel and 69% of footwear purchased in the United States.

Investors are worried that the increase in retail prices will hit consumer spending which has underpinned the U.S. economy, and trade uncertainty makes businesses hold back capital spending.