Trump’s Tariffs Are Producing Billions, But China Isn’t Paying (#GotBitcoin?)
President Donald Trump is right to say that his tariffs are generating billions of dollars for the U.S. But China and other countries aren’t paying them as he’s suggested. Trump’s Tariffs Are Producing Billions, But China Isn’t Paying (#GotBitcoin?)
Trump’s comments have suggested the U.S. is benefiting without paying, such as a Jan. 3 tweet that “the United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly.” A day later he told reporters that “we’ve taken in billions and billions of dollars in tariffs from China and from others.’’
“Let me be very clear: Tariffs are taxes paid by American families and American businesses — not by foreigners,’’ Thomas Donohue, president of the U.S. Chamber of Commerce, said in his annual state of American business address last week.
Companies aren’t equivocating about the cost. Ford Motor Co. executives, speaking during the Deutsche Bank Global Automotive Conference in Detroit on Wednesday, said they see a $700 million headwind from duties this year. General Motors Co. said late last year that tariffs on steel and aluminum had already cost it $1 billion.
According to data from U.S. Customs and Border Protection, more than $13 billion in duties imposed by the Trump administration were assessed on imported goods as of Dec. 18. Actual collections could lag and be lower because of refunds and other factors, but Treasury Department reports show receipts from all customs duties have risen sharply since the tariffs took effect.
While Trump has suggested on Twitter and in public comments that tariffs are somehow being charged to or paid by China and other countries, trade economists say that’s generally misleading. U.S. importers of record are responsible for the duties, and ultimately U.S. businesses and consumers could pay through higher costs, they say.
Trump is “suggesting this is bringing in lots of new revenue and all of the burden is falling on the Chinese,’’ said Phil Levy, senior fellow on the global economy at the Chicago Council on Global Affairs and a former senior economist for trade for President George W. Bush’s Council of Economic Advisers. “I think that’s mostly false.’’
Johns Hopkins University applied economics professor Steve Hanke, a member of the Council of Economic Advisers under President Ronald Reagan, put it more bluntly.
“Tariffs on Chinese imports are paid by Americans, not by the Chinese or their government. The President’s tariffs are simply a #tax on American consumers,’’ Hanke said on Twitter Jan. 6.
Hanke also pointed out that there are offsets to increased revenue from Trump’s tariffs, including as much as $12 billion in aid being paid to farmers after China slapped retaliatory tariffs on U.S. agricultural products.
The White House didn’t respond to messages seeking comment. Trump has said any economic pain from tariffs or retaliatory duties imposed by other countries will be outweighed by the long-term benefits from new trade deals.
The Trump administration imposed tariffs starting last January on foreign-made solar equipment and washing machines, then levied duties on steel and aluminum imports from March on the grounds of national security. He has slapped duties on about $250 billion in Chinese goods in response to a trade deficit and allegations of intellectual property theft and other unfair trade practices.
Customs and Border Protection collects the tariffs based on the price paid for shipments and the tariff rate in effect, and duties are charged when shipments are released into the U.S. The assessed amount now tops $13 billion, with $8 billion coming from the duties on Chinese goods, data provided by CBP show.
The duties are deposited in the U.S. Treasury. Customs duties increased by $8 billion in the final three months of 2018, an 83 percent gain from the year-ago period thanks in large part to tariffs imposed by Trump, according to estimates from the non-partisan Congressional Budget Office.
It’s not foreign governments paying, said Dan Anthony, vice president of The Trade Partnership, an economic consulting firm. U.S. businesses paid $2.8 billion in new Trump tariffs in October alone, The Trade Partnership determined in an analysis for Tariffs Hurt the Heartland, a coalition of business and agricultural groups lobbying against Trump’s duties.
Trump’s Trade War May Be Driving Chinese Investors To Bitcoin
As the Chinese yuan falls in value due to factors like the ongoing trade war with the U.S., there are signs that locals are increasingly moving funds into bitcoin.
According to a Bloomberg analysis of prices over 30 days, the negative correlation between the yuan and bitcoin has fallen to a record low in the last seven days.
While previously the Chinese government has sought to keep the value of its national currency above 7 CNY to the dollar, last month the yuan was allowed to slide below that level, dropping to its lowest for 10 years. The move was reportedly in response to U.S. President Donald Trumps threats in early August to impose a 10 percent tariff on Chinese imports.
That the drop in yuan value is causing a flight by Chinese investors is backed up by exchange data. Bloomberg spoke to Dr. Garrick Hileman, research director at Blockchain and CoinDesk contributor, who said that bitcoin prices on exchanges such as Huobi that cater more to Chinese traders are trading at a premium.
The inverse correlation between bitcoin and the yuan also notched up in April and May “as the tensions ratcheted up with the deterioration on U.S.-China trade relations,” Hileman said.
The report comes as new details emerge on China’s own national digital currency. The recently appointed chief of the digital currency division of the People’s Bank of China has said the upcoming digital yuan will have features not offered by Facebook Libra.
U.S. Collects a Record $7 Billion in Tariffs in September
Tariff revenue jumped 9% from August and was up more than 59% from a year earlier.
The U.S. collected a record $7 billion in import tariffs in September, fresh figures show, as new duties kicked in on apparel, tools, electronics and other consumer goods from China.
Tariff revenue jumped 9% from August and was up more than 59% from a year earlier. The revenue is a bounty for the U.S. Treasury, but is an increasing burden on the American businesses that import Chinese products—and their customers.
The new figures are based on an analysis of official Commerce Department data compiled by Trade Partnership, an economic consulting firm. The data was released by Tariffs Hurt the Heartland, a coalition of business and agricultural groups who oppose the tariffs.
Last month’s sharp rise was driven by a new 15% levy on consumer goods that went into effect Sept. 1. Imports of these items were valued at $111 billion last year, according to an analysis by The Wall Street Journal.
The U.S. has always collected tariffs on some items, but those duties have soared under a series of new levies that President Trump ordered on Chinese imports beginning last year. Mr. Trump said the duties were needed to get China to curtail trade practices that penalize U.S. businesses.
The tariffs are assessed directly to importers in the U.S., although Mr. Trump has at times claimed China pays them. But when he postponed a batch of tariffs until Dec. 15, he said he didn’t want to cast a pall over the holiday shopping season.
Still, the rising cost of the tariffs has increased pressure from business groups to resolve the trade dispute.
“It’s a massive expansion of taxation on American employers and consumers,” said Peter Bragdon, chief administrative officer of the Columbia Sportswear Co., whose firm had many apparel items hit in the latest tranche of tariffs. The company has notified customers that they would have to raise prices on many of those items, he said.
The Trump administration is considering removing some of the tariffs against China as part of the negotiations over “phase one” of a U.S.-China trade deal.
The first major tariffs were placed on global imports of steel and aluminum in March 2018, but tariffs from China began in July 2018 and have been increased on several different lists of goods. The increased tariff rates on those lists have become the vast bulk of duties collected.
More than $5 billion was collected on imports from China last month, with tariffs assessed to the rest of the world garnering about $2 billion. The new tariffs imposed on the European Union in October, imposed after a long-running dispute at the World Trade Organization over aircraft subsidies, aren’t yet included in the data.
In the 12 months through September, the U.S. brought in more than $70 billion in tariffs, according to data from the Treasury Department. That figure is about double the amount of tariff revenue from before the trade war.
While tariff collections have increased, so have trade-war related expenses. To help mitigate the losses to U.S. agricultural exporters, who have suffered from international tariff retaliation, the Agriculture Department has authorized $28 billion in payouts to farmers.
The figures only account for the direct burden of the tariffs, said Dan Anthony, vice president of the Trade Partnership.
“This is very much the low-end estimate of costs, because there’s also costs associated with shifting suppliers, shifting to higher-cost sources, that aren’t going to show up in the data,” said Mr. Anthony.
Trump’s Tariffs Are Producing, Trump’s Tariffs Are Producing,, Trump’s Tariffs Are Producing,, Trump’s Tariffs Are Producing,Trump’s Tariffs Are Producing, Trump’s Tariffs Are Producing,, Trump’s Tariffs Are Producing,, Trump’s Tariffs Are Producing