America is Paying Trump’s Tariffs
Earlier today Donald Trump faced China’s retaliation against his $200 billion in tariffs in the form of $60 billion in Chinese tariffs. When looking at those numbers, it might seem that the US is winning, but it is in fact the US who pays that $200 billion. As much as Trump loves to say that China is the one paying, US companies and consumers are really the ones suffering- not China.
On May 9th, the president tweeted, “Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S.”
There are a few reasons why that statement is absolutely false. The US tariffs are not actually being paid by China at all, and certainly aren’t going ‘directly to the Treasury of the US’. American companies that import goods from China are actually the ones paying the 25% tariffs. Every time Trump adds new products to be tariffed, including food products, steel, and manufacturing equipment, more American companies have to pay the taxes. We as the consumers also suffer, because the cost of goods increases with the taxes, and so the prices must go up for the same amount of profit to be made. The victims of the trade war are, in fact, American companies and consumers.
As for tariffs imposed by China, they too will have a negative effect. Chinese President Xi Jinping enacted $60 billion in tariffs today, along with previous ones. As he enacts the tariffs, Chinese companies pay taxes on the goods. While that might sound good, it doesn’t make our situation any better. China has less than half the amount of tariffs the US does, and they don’t import as much from the US as the US does from them. It is an unequal trade off, and the US is on the losing end. US export is not as vital to China as they are to us, meaning that Chinese companies can simply look elsewhere for products, hurting the US economy, while US companies are forced to pay the tariffs. Ultimately, Trump has little support in his venture.
As an example, let’s look at engine and turbo re-manufacturing companies in the US. Certain auto parts in engines and turbos coming from China, the leading supplier in the industry, have a 25% tariff. Because China is the only option for several re-manufacturing companies, they have no choice but to pay more for their supplies in re building auto parts. As their cost goes up, they must increase the price of the engines in order to continue their profit. If they don’t raise the profit, the company and it’s workers suffer, if they do, then the consumer suffers. Either way, US citizens and the economy are actually harmed by the tariffs.
Despite Trump’s tweets that “Tariffs are great!” they actually aren’t for the people feeling their effects. According to the Times, the average american paid an extra $20 during 2018 because of the trade war. While they may not sound like much, there are 327 million people in the US, and the costs of the trade war are rising each day, with Trump making no moves to end it.
