Is It Really Possible That Our President Doesn't Understand How Tariffs Work?

With President Trump citizens are often put in the uncomfortable position of having to decide whether he is uninformed or simply lying. Not a great choice. For example, what to make of this tweet on Friday regarding our trade war with China...

Trump on Twitter: "Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S...."

Obviously this is not how tariffs work. China doesn't pay them, the companies that import the products pay them and then pass them on to their customers in the form of price increases. So, essentially, tariffs are a tax on the consumer of the goods. To avoid the tariffs, some companies will decide to buy US made goods or those manufactured in other nations. But, that doesn't seem to be what's happening so far in the trade war with China.

PBS News Hour: "The burden of Trump’s tariffs on imports from China and other countries falls entirely on U.S. consumers and businesses that buy imports, said a study in March by economists from the Federal Reserve Bank of New York, Columbia University and Princeton University. By the end of last year, the study found, the public and U.S. companies were paying $3 billion a month in higher taxes and absorbing $1.4 billion a month in lost efficiency."

"A coalition of U.S. trade organizations representing retail businesses, tech, manufacturing and agriculture said this past week: “For 10 months, Americans have been paying the full cost of the trade war, not China.” It said: “To be clear, tariffs are taxes that Americans pay, and this sudden increase with little notice will only punish U.S farmers, businesses and consumers.”

So, is it that the President doesn't understand this, or that he hopes some Americans will believe his nonsense about China paying tariffs "directly to the Treasury?"

#trade #news #china