(Reuters) – U.S. President Donald Trump says China pays the tariffs he has imposed on $250 billion of Chinese exports to the United States.
But that is not how tariffs work. China’s government and companies in China do not pay U.S. tariffs directly. Tariffs are a tax on imports and are paid by U.S.-registered firms to U.S. customs when goods enter the United States.
Importers often pass the costs of tariffs on to customers – manufacturers and consumers in the United States – by raising their prices. U.S. business executives and economists say U.S. consumers foot much of the tariff bill.
White House economic adviser Larry Kudlow has said that both sides suffer with tariffs.
The tariff bill will rise further if Trump is unable to make progress on U.S. demands for reform in China when he meets with Chinese President Xi Jinping later this month. Trump has said he would impose tariffs on the remaining $300 billion of goods imported from China that are not yet subject to import taxes.
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