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Are the tariffs imposed by President Donald Trump on China hurting American consumers? His team says no.
Peter Navarro, director of the White House’s Office of Trade and Manufacturing Policy, told CNN’s Jake Tapper that was not the case. Tapper asked about a study that found U.S. importers are shouldering about 95% of the price change from the tariffs, China only about 5%.
After Navarro pushed back, there was this exchange:
"Tariffs aren't hurting anybody in the United States?" asked Tapper.
Navarro responded, "They're not hurting anybody here."
The White House didn’t respond to our requests for information to support Navarro’s statement.
But evidence to the contrary is overwhelming.
Importers can respond to tariffs in four ways, Howard Gleckman, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, told us.
Two of the ways are paying their suppliers less and buying from producers in countries not subject to the tariffs; those moves would shield Americans.
But the other two ways — raising prices or absorbing the tariffs and cutting into their bottom line — do make an impact.
It’s worth noting that, in the back-and-forth of the trade war, China has done a series of its own tariff reductions. That helps U.S. exporters.
But despite claims by Trump that China has been slashing prices, Brookings economist Gary Burtless and Boise State University political scientist Ross Burkhart said they see no evidence of price slashing as a result of the U.S. tariffs — at least on any scale as large as the impact of the tariffs.
Evidence of how tariffs have hurt Americans has been accumulating for months.
The trade war reduced U.S. real income by $1.4 billion per month by the end of 2018, according to economists at the Federal Reserve Bank of New York, Princeton University and Columbia University.
The price of washing machines sold in the United States rose nearly 12% because of the 2018 tariffs, according to University of Chicago researchers. (The price of dryers rose by a similar amount, even though they weren’t subject to the tariffs.)
Meanwhile, retaliatory tariffs imposed by China have particularly hurt U.S. farmers. U.S. agricultural exports to China dropped to $9.1 billion in 2018, down from $19.5 billion the previous year, according to the American Farm Bureau, an agricultural lobbying group. That figure has continued to drop, with exports to China in the first half of 2019 sinking to $1.3 billion. Trump has responded by boosting subsidies to farmers.
Trump’s plan to impose more tariffs on China in September 2019 will reduce consumer purchases, raise prices and limit hiring, according to four national retail groups.
Studies have also consistently documented the general impact on Americans.
About 79% of manufacturers and 60% of service firms said tariffs had increased their input costs at least slightly, "a considerably more widespread effect" than in its survey a year earlier. That’s according to a Federal Reserve Bank of New York August 2019 survey of business leaders in New York and parts of Connecticut and New Jersey.
The impact of tariffs on imports of steel and Chinese goods that were imposed in 2018 was largely on the United States, not China, according to the study Tapper alluded to. It was done by researchers from Harvard University, the University of Chicago and the Federal Reserve Bank of Boston.
A variety of companies have reported harm from the U.S. and retaliatory tariffs, including Walmart, Caterpillar and Tyson Foods, the nonpartisan Congressional Research Service found.
Navarro said U.S. tariffs on China are "not hurting anybody" in the United States.
Numerous businesses, ranging from Coca-Cola, to Walmart to Costco to washing machine makers, raised prices because of the tariffs. And study after study has confirmed that the tariffs primarily hit Americans, not China. It’s simply ridiculous to make a flat claim that the tariffs aren’t hurting anyone in the United States.
We rate this statement Pants on Fire.
CNN, Peter Navarro interview (3:35), Aug. 18, 2019
PolitiFact, "Who pays for US tariffs on Chinese goods? You do," May 14, 2019
PolitiFact California, "Kamala Harris claims Trump’s tariffs cost $1.4 billion per month," June 10, 2019
Email, Howard Gleckman, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, Aug. 19, 2019
Washington Post, "Kudlow acknowledges U.S. consumers, not China, pay for tariffs on imports," May 12, 2019
Peterson Institute for International Economics, "Trump’s Trade War Timeline: An Up-to-Date Guide," Aug. 13, 2019
University of Chicago, "The Production, Relocation, and Price Effects of US Trade Policy: The Case of Washing Machines," April 18, 2019
Harvard University, "Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy," May 2019
Federal Reserve Bank of New York, "Supplemental
American Farm Bureau Federation, "China Trade Standstill More Bad News for Farmers," Aug. 5, 2019
Interview, Ross Burkhart, Boise State University professor of political science, Aug. 19, 2019
Reuters, "U.S. retailers blast new China tariffs, say move will raise prices further, hurt jobs," Aug. 1, 2019
Interview, Monica de Bolle, senior fellow at the Peterson Institute for International Economics, Aug. 19, 2019
Washington Post Fact Checker, "Trump’s repeated claim that China is paying ‘billions’ in tariffs to the Treasury," Feb. 22, 2019
Email, New York University business school economics professor Lawrence White, Aug. 19, 2019
Business Insider, "These popular brands say Trump's tariffs are forcing them to raise prices," Oct. 5, 2018
Mary Amiti, Stephen J. Redding and David Weinstein, "The Impact of the 2018 Trade War on U.S. Prices and Welfare," March 2, 2019
Congressional Research Service, "Trump Administration Tariff Actions: Frequently Asked Questions," Feb. 22, 2019
Email, Brookings Institution economic studies senior fellow Gary Burtless, Aug. 19, 2019
Fortune, "Costco Says Trump’s China Tariffs Are Increasing Prices on These Products," June 3, 2019
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