Kudlow contradicts Trump, says China isn't paying tariffs on goods going into US

[Igel]

14. The asymmetry's apparent, not real.

Let's start where it's more obvious.

You sell soybeans. Because of tariffs, your soybeans that were $10/bushel now cost $12.50/bushel in China. You have two choices. You say, Oh, well, we don't make the sale. Or you let the price of your soybeans drift down to be competitive with the price in China.

The Chinese consumer is, of course, paying for the tariff. Except that for something with an elastic price, it's the American farmer who's actually taking in less money. Who pays? The farmer pays. De facto, if not de jure.

If it's something like Exclusive Tiddly Widgetizers, made entirely in the US, then the price is inelastic and it's just the Chinese consumer and her insatiable and inelastic demand for Widgetizers that pays the tariff. Who pays? The Chinese consumer pays.

It's the same on the US side. If there's an alternative source, then China has to lower its price; if not, then the American consumer pays.

We act as thought there's a real asymmetry.