Fog of misinformation on trade
May 11, 2019 3:58 PM EDT
Calvin Woodward, Associated Press
Hope Yen, Associated Press
... TRUMP: “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.” — tweet Friday.
THE FACTS: This is not how tariffs work. China is not writing a check to the U.S. Treasury. The tariffs are paid by American companies, which usually pass the cost on to consumers through higher prices. One of the theories is that the higher prices will encourage consumers to buy goods made in the U.S. or elsewhere instead. But the risk is that consumers could simply respond by spending less than they otherwise would, which would hurt growth.
The burden of Trump’s tariffs on imports from China and other countries falls entirely on U.S. consumers and businesses that buy imports, said a study in March by economists from the Federal Reserve Bank of New York, Columbia University and Princeton University. By the end of last year, the study found, the public and U.S. companies were paying $3 billion a month in higher taxes and absorbing $1.4 billion a month in lost efficiency.
A coalition of U.S. trade organizations representing retail businesses, tech, manufacturing and agriculture said this past week: “For 10 months, Americans have been paying the full cost of the trade war, not China.” It said: “To be clear, tariffs are taxes that Americans pay, and this sudden increase with little notice will only punish U.S farmers, businesses and consumers” ...
https://www.pbs.org/newshour/economy/ap-fact-check-trumps-fog-of-misinformation-on-trade
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