White House economic adviser Larry Kudlow contradicted President Donald Trump on Sunday by acknowledging that U.S. consumers end up paying for the administration's tariffs on Chinese goods.
During an interview with "Fox News Sunday," Kudlow, who is the director of the National Economic Council, was pressed by anchor Chris Wallace about Trump's repeated, inaccurate claim that China itself pays for the tariffs.
"It’s not China that pays tariffs," Wallace said. "It’s the American importers, the American companies that pay what, in effect, is a tax increase and oftentimes passes it on to U.S. consumers."
"Fair enough," Kudlow responded. "In fact, both sides will pay. Both sides will pay in these things."
Later, Kudlow said China does not pay the tariffs, but "will suffer GDP losses and so forth with respect to a diminishing export market."
"Both sides will suffer on this," he added.
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The interview came as another round of trade talks between the Trump administration and China ended last week without the two sides reaching a final agreement. On Friday, the administration raised tariffs on $200 billion in Chinese imports from 10 percent to 25 percent, prompting Beijing to say it would take countermeasures.
"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," Trump tweeted Saturday. "These massive payments go directly to the Treasury of the U.S."
Trump tweeted Sunday that the U.S. "will be taking in Tens of Billions of Dollars in Tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-Tariffed countries ..."
"We will then spend (match or better) the money that China may no longer be spending with our Great Patriot Farmers (Agriculture), which is a small percentage of total Tariffs received, and distribute the food to starving people in nations around the world!" Trump continued. "GREAT!"
Tariffs are imposed on products originating in foreign countries and not on those nations' governments. As a result, they increase costs for importers of the products and can drive up prices for consumers.
Trump issued a statement Friday saying the tariffs on Chinese goods "may or may not be removed" while trade talks continue. U.S. Trade Representative Robert Lighthizer said last week that the U.S. was preparing to expand the tariffs to cover $300 billion of Chinese products that aren't already facing import taxes, or virtually everything imported from China.