China Only Pays 8% of U.S. Tariffs – Who Picks Up the Rest?

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via reason:

Former President Donald Trump and his top trade advisers spent years arguing that tariffs applied to imports from China were not being paid by Americans—despite what economic theories and actual reality suggested.

Since taking office, the Biden administration has picked up that same line of argument. U.S. Trade Representative Katherine Tai said during her confirmation hearing in February that she views tariffs as “a legitimate tool” to wield against China—the obvious implication being that tariffs are applying some sort of economic pressure on China that the Biden White House could use for political purposes, in much the same way as Trump sought to do.

Both are wrong.

American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a new report from Moody’s Investors Service. Just 7.6 percent of the added costs of the tariffs are being absorbed by China, the investment firm found.

And it gets worse. When China responded to Trump’s tariffs by slapping new tariffs on many American goods, American firms paid a significant price. That’s because “U.S. exporters, unlike China’s exporters, lowered by roughly 50 percent the prices of goods affected by foreign retaliatory tariffs, carrying a much higher cost burden than foreign importers of goods under U.S. tariffs,” writes Dima Cvetkova, an associate analyst at Moody’s and author of the report.


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