China puts $75bn of retaliatory tariffs on US goods
China has unveiled retaliatory tariffs against about $75bn (£60bn) worth of US goods, putting up to 10% on top of existing rates in the latest tit-for-tat in the dispute between the world’s top two economies.
The salvo from China on Friday comes after the US unveiled tariffs on an additional $300bn of Chinese goods, including consumer electronics, scheduled to go into effect in two stages on 1 September and 15 December.
China’s commerce ministry said in a statement it would impose additional tariffs of 5% or 10% on a total of 5,078 items from the US, including agricultural products such as soya beans, and crude oil and light aircraft. It also reinstated tariffs on cars and car parts originating in the US.
Who pays Trump’s tariffs, China or US customers and companies?
US President Donald Trump Trump has often repeated that China pays for US tariffs on its goods. ‘We have billions of dollars coming into our treasury from China. We never had 10 cents coming into our treasury; now we have billions coming in’ he said on 24 January 2019. On 5 May he tweeted: ‘For 10 months, China has been paying Tariffs to the USA.’
But that is not how tariffs work.
China’s government and companies in China do not pay tariffs directly. Tariffs are a tax on imports. They are paid by US-registered firms to US customs for the goods they import into the United States. Importers often pass the costs of tariffs on to customers – manufacturers and consumers in the United States – by raising their prices.
Chinese suppliers do shoulder some of the cost of US tariffs in indirect ways. Exporters sometimes, for instance, are forced to offer US importers a discount to help defray the costs of higher US duties. Chinese companies might also lose business if US importers find another tariff-free source of the same goods outside China.
White House economic adviser Larry Kudlow has acknowledged that ‘both sides will suffer on this’ contradicting the president.
“China’s decision to implement additional tariffs was forced by the USs unilateralism and protectionism,” the ministry said.
US equity index futures fell on the news of the tariffs, pointing to opening losses on Wall Street.
The White House trade adviser Peter Navarro told Fox Business Network that trade negotiations with China would still go on behind closed doors. The US trade representative’s office had no immediate comment on China’s tariffs announcement.
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