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 tariffs directly. Tariffs are a tax on imports. They are paid by U.S.-registered firms to U.S. 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. U.S. business executives and economists say U.S. consumers foot much of the bill through rising prices.
Chinese suppliers do shoulder some of the cost of U.S. tariffs in indirect ways. Exporters sometimes, for instance, are forced to offer U.S. importers a discount to help defray the costs of higher U.S. duties.
But U.S.-based importers are managing the higher tax burden in a number of ways that hurt U.S. companies and customers more than China.
U.S. companies and consumers paid $3 billion a month in additional taxes because of tariffs on Chinese goods and on aluminum and steel from around the globe, according to a study by the Federal Reserve Bank of New York, Princeton University, and Columbia University. Companies shouldered an additional $1.4 billion in costs related to lost efficiency in 2018, the study found.
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