U.S. President Donald Trump said on Sunday he would raise tariffs to 25 percent from 10 percent on $200 billion of Chinese goods.
The United States has levied tariffs on a total of $250 billion of Chinese imports, global steel and aluminum imports, and shipments of washing machines and solar panels since January 2018, when Trump’s administration levied its first trade tariffs.
Trump has referred to himself as a “Tariff Man” and says the duties he has imposed on a range of goods and metal imports are filling up state coffers.
Through mid-March, Washington netted $15.6 billion through tariffs imposed since February 2018, according to data from U.S. Customs and Border Protection (CBP). Customs duties receipts in the first half of the current fiscal year, which began on Oct. 1, have shot up by 89 percent from a year ago to $34.7 billion, data from U.S. Treasury shows.
WHO IS PAYING THE TARIFFS?
Trump says China foots the bill for U.S. tariffs on imported Chinese good.
“For 10 months, China has been paying Tariffs to the USA” he wrote on Twitter on Sunday.
“We have billions of dollars coming into our Treasury — billions — from China. We never had 10 cents coming into our Treasury; now we have billions coming in,” he said on Jan. 24.
PAID AT CUSTOMS
A tariff is a tax on imports. The CBP typically requires importers to pay the duties within 10 days of their shipments clearing customs.
So the tariffs are paid to the U.S. government by importing companies. Most importers of Chinese-made goods are U.S. companies, or the U.S.-registered units of foreign companies that import goods from China.
Every item imported into the United States legally has a customs code. Importers are expected to check the tariffs and other taxes and duties due on the goods they bring in, calculate what they owe, and pay it.
The CBP reviews the payments. If it discovers an underpayment, U.S. customs will send the importer a fresh bill.
DO U.S. IMPORTERS PASS ON THE COSTS OF TARIFFS TO THEIR SUPPLIERS IN CHINA?
Some of them do, yes. So Chinese companies pay some of the cost. An importing company paying tariffs can manage the cost in several ways:
- Pay the full cost and live with a lower profit margin.
Cut costs to offset higher tariffs.
Ask suppliers in China for a discount to help offset the higher tariffs.
Seek to source supplies from outside China. So some Chinese companies are losing business.
Pass the tariff costs on to customers by increasing retail prices.
Most importers could use a mix of those options to spread the cost between suppliers, themselves, and consumers or buyers.
HOW DOES THAT ACTUALLY WORK?
For example, higher duties on imports of metals and Chinese products increased Caterpillar’s production costs by more than $100 million last year. In response, the heavy-duty equipment maker increased prices for its products.
Tractor manufacturer Deere & Co estimates a $100 million increase in its raw materials costs this year because of Trump’s tariffs on Chinese imports. Deere has cut costs and increased prices to protect its profits.
A Congressional Research Service report in February found that the tariffs had led to an increase of as much as 12 percent in the price of washing machines in the United States, compared to January 2018 when the duties were not in effect.
According to a study by the Peterson Institute for International Economics, the steel and aluminum tariffs increased the price of steel products by nearly 9 percent last year, pushing up costs for steel users by $5.6 billion.
Separately, a study by the Federal Reserve Bank of New York, Princeton University, and Columbia University concluded that the Chinese and steel and aluminum tariffs cost companies and consumers $3 billion a month in additional taxes and companies a further $1.4 billion in efficiency loses in 2018.0
WHAT DO CHINESE FIRMS PAY?
China has retaliated against U.S. tariffs by imposing its own tariffs on imports from the United States.
Most importers in China are Chinese. So in the same way the U.S. government is receiving import taxes on Chinese goods from U.S. importers, the Chinese government is receiving taxes on U.S. goods from Chinese importers.
WHAT’S THE TOTAL BILL?
Trump has imposed a 25 percent tax on $50 billion of Chinese goods, and a 10 percent tax on goods worth $200 billion more.
That, in theory, would mean the U.S government would receive a total of $32.5 billion per year on top of whatever duties were already in place.
U.S. tariff revenue in 2018 was $49.7 billion. That was up 41.2 percent from the $35.2 billion in 2017 before the trade wars started.
China has imposed 25 percent tariffs on $50 billion of U.S. imports, and also has tariffs of 5 to 10 percent on $60 billion more. That equates to around $15.5 billion to $18.5 billion in tariffs.
Chinese tariff revenue in 2018 was 284.8 billion yuan ($42.41 billion), down from 299.8 billion yuan ($44.65 billion) in 2017.
your ad here