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13 May, 2019 07:44

‘Both sides will suffer’: Trump’s chief economist admits US companies to pay for Chinese tariffs

‘Both sides will suffer’: Trump’s chief economist admits US companies to pay for Chinese tariffs

In a remarkable break from his boss’ rhetoric, President Donald Trump’s chief economic adviser Larry Kudlow conceded that US businesses and consumers are the ones who have to pay up for the hike in Chinese import taxes.

Pressed by Fox News’ Chris Wallace, Kudlow appeared to contradict Trump’s recently adopted mantra that an increase in tariffs on Chinese goods is entirely beneficial to the US.

Before confronting Kudlow, Wallace ran a clip of Trump brushing off claims that his trade policies will backfire against US citizens and companies.

“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 largely by China,” Trump said

While economists outside the Trump administration have long disputed the US president’s underlying premise, Kudlow is an insider who seemed to have agreed with Wallace that import tariffs are just tax increases in disguise.

“It is not China that pays tariffs, it’s the American importers, the American companies that pay what in effect is a tax increase and oftentimes pass it onto US consumers,” Wallace said, prompting Kudlow to agree, albeit with a reservation.

“Fair enough. In effect, both sides will pay,” Kudlow said. Wallace continued the pressure.

“But if it is tariffs on goods coming into the country, the Chinese aren’t paying,” he said, eventually eliciting a “No” from Kudlow. Still, the adviser said, China would suffer due to the decrease in export volume that would affect its GDP. He admitted, however, that this doesn’t change the fact that the US consumers and business are negatively affected.

The US and China failed to make progress in the latest round of trade talks that wrapped up in Washington on Friday. Having blamed the setback on China, which allegedly demanded that some of the previously agreed terms be renegotiated, Trump has praised his tariff hike as “easier and quicker” than making a deal. 

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The president doubled down on his argument on Sunday, tweeting that the US would be “taking in Tens of Billions of Dollars in Tariffs from China,” while advising American consumers who have been concerned by the lack of imported goods to buy them somewhere else or take matters into their own hands and produce them in the US.

“We are right where we want to be with China,” Trump tweeted.

On Friday, a 15 percent hike on some $200 worth of Chinese goods came into effect, while an increase on another $300 billion worth of Chinese imports is on its way.

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