Tariffs on China Do not cover the cost of Trump's trade war
WASHINGTON – President Trump on Monday portrayed America as being at the winning end of his trade war, saying that tariffs penalize China's economy and generate billions of dollars for the United States, an economic victory that will allow him to continue his struggle without domestic damage .
"We've taken tens of billions of dollars in tariffs from China," Trump told journalists during a "Made in America" product house in the White House. While China has taken $ 16 billion off-board by stopping its US agriculture purchases, he said the US has "taken a lot, much more ̵[ads1]1; many times in tariffs."
But governments show that revenue that the United States has collected from tariffs of $ 250 billion of Chinese merchandise is not enough to cover the costs of the president's bailout for farmers, let alone compensate for many other industries damaged by trade tensions. The longer Mr. Trump's dispute with China goes on, the harder it may be for him to ignore that gap.
Herr. Trump's Chinese import tariffs increased $ 20.8 billion through Wednesday, according to US Customs and Border Protection data. Mr. Trump has already committed to paying US farmers damaged by the $ 28 billion trade war.
The president has rolled out two rounds of financial support to farmers: a $ 12 billion package announced in July last year, of which nearly $ 10 billion has been spent and another $ 16 billion announced in May.
The government has not provided such benefits to the myriad other businesses, including aircraft manufacturers, technology companies and medical device manufacturers, who have lost contracts and revenues as a result of Mr. Trump's tariffs and China's retaliation against US goods.
Trade talks with China have failed in recent months, and Mr. Trump and his assistants seem to have no hurry to resolve the conflict, and trust that China is suffering more from the damage, if not all.
Herr. Trump's tariffs are selectively damaged China, where exports drive about 20 percent of the economy, compared to 12 percent in the US. On Monday, the Chinese government said the economy had grown to a 6.2 percent annual rate in the second quarter, the lowest price of 27 years.
"The US tariffs are of great importance to companies who want to leave China for not" Trump wrote on Twitter Monday morning, commenting on the Chinese growth figures. "Thousands of companies go. Therefore, China wants to enter into an agreement with the United States and wants it not to have destroyed the original deal first."
However, there is little evidence that China's losses are America's gains. Much of the business activity shifts to other low-cost countries, such as Vietnam, with transition costs associated with US companies that rely on them.
Many companies have announced changes in their supply chains or other effects from the tariffs, and more can be revealed as companies report second quarter earnings over the coming weeks. Nintendo has accelerated the shift of its switch console to Vietnam from China, according to Panjiva, a supply chain research firm, while GoPro, Hasbro and other companies rework their supply chains to reduce exposure to China.
The President and his advisers have argued that now is the time to try to force China to change its business practices as they say have hurt US companies and resulted in the loss of US jobs. The administration claims that the status quo was not free of charge for the US economy. A Chinese Intellectual Theft Administration Administration survey found that China's policies had resulted in US $ 50 billion per year damage to the US economy.
Many trade experts and business executives are supported to meet Beijing, and some have said the heavy cost of the commercial war will be worth it if the US can persuade China to open up its economy. But most disagree with the administration's claim that the trade war has no negative impact on US businesses.
"It is absolutely absolute folly to suggest that this is free for the United States," said Rufus Yerxa, president of the National Foreign Trade Council, representing major US exporters.
Numerous studies have shown that American consumers bear much of the cost of the charges. Studies from the Tax Fund in Washington and the Penn Wharton Budget Model at the University of Pennsylvania have shown that tariffs represent a significant tax increase on Americans by raising the prices of goods. The damage is concentrated, as a percentage of revenue, among the lowest incomes, which use a larger share of their wages on imports than the upper middle class and the rich.
The administration has gradually increased the amount of Chinese goods subject to tariffs over the past year, from an initial $ 34 billion to a total of $ 250 billion, and hit the tariff on these goods.
However, the monthly rate of income collection from tariffs has not increased this year. That's because America imports fewer Chinese goods than it did a year ago, which has canceled the higher tariffs on a larger proportion of Chinese goods.
This downturn appears to be the result of an overall decline in trade – which has contributed to weakening exports for US manufacturers – and shifting to supply chains to other countries. Imported goods from Vietnam have risen more than 30 percent this year from a year ago, Display Database.
Tariff revenue is likely to increase if Mr. Trump followed through on his threat of imposing tariffs on almost all Chinese goods. [19659002] The administration has attempted to set the government's rules to work to shelter and support US businesses. On Monday, Mr. Trump signed an executive order requiring 95 percent of steel and iron entering projects funded by federal contracts to eventually be made US, up from 50 percent.
The order is the latest in a number of proclamations the president has made to encourage more purchases of US goods. An order in January encouraged companies to use US iron, steel, aluminum, cement and other products to the extent practical, but did not set binding targets.
John Ferriola, CEO of Nucor, a steel company in North Carolina, applauded the move. "We think it's good for our country, and it's probably good for the industry, I can't deny it," he said.
