The great strength of American capitalism is also its great weakness, namely, its extremely high weapons productivity. A number of factors have produced increases in productivity, like, the mechanization of the production process that got under way in England as early as the 18th century. In the early 20th century, then, American industrialists made a contribution in the form of automatiion. ..Amor Patriae
Monday, May 6, 2019
President Trump’s top trade negotiator said Monday that the White House will raise tariffs on $200 billion in Chinese goods after a setback in trade talks between the U.S. and Beijing.
U.S. Trade Representative Robert Lighthizer said Monday that Trump will raise tariffs from 10 percent to 25 percent on $200 billion worth of Chinese ports, according to media reports.
The president announced Sunday on Twitter that he had planned to go through with the tariff hike, which had been indefinitely delayed as the U.S. and China sought to finalize a deal to reduce trade barriers.
"The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars," Trump tweeted Monday, renewing his pledge. "Sorry, we’re not going to be doing that anymore!"
Trump and his top aides have said for months that the U.S. was close to finishing a deal with Beijing to reduce trade barriers and ramp up purchases of American crops by the Chinese government.
Chinese Vice Premier Liu He, Beijing’s lead on trade negotiations, was scheduled to visit Washington, D.C., this week after Lighthizer and Treasury Secretary Steven Mnuchin met with officials in China last week.
But several outlets reported Monday that talks between the Trump administration and China hit a roadblock after Beijing refused to agree to measures to halt intellectual property transfers that would require a change to Chinese law.
“We felt we were on track to get somewhere. Over the course of last week we have seen an erosion of commitments by China,” Lighthizer said Monday, according to Bloomberg News. He added there were still significant issues to be hammered out in talks.
Trump’s decision to boost tariffs on Chinese goods spurred fears that the U.S and China could fail to reach a deal, sending Wall Street into a frenzy Monday morning.
The Dow Jones Industrial Average plunged more than 400 points, or 1.6 percent, while the S&P 500 dropped nearly 45 points, or 1.5 percent, and the Nasdaq composite fell 145 points, or 1.8 percent. But the major indexes made a massive comeback, recovering almost all of their losses from earlier in the day.
Trump on Sunday also threatened to impose new import taxes on more than $300 billion in Chinese goods, which would likely subject all imports from China to tariffs.
"For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods," Trump tweeted Sunday afternoon. "These payments are partially responsible for our great economic results.
While Trump frequently says that China is paying tariffs applied to its imports, U.S. importers and consumers purchasing goods from China are actually paying the cost of tariffs.
Since tariffs are applied by the federal government on foreign goods purchased within the states, the costs often get passed down to U.S consumers through higher prices charged by retailers or other importers
Who pays Trump's tariffs - China and other exporters or U.S. customers?
U.S. President Donald Trump said on Sunday he would raise tariffs to 25 percent from 10 percent on $200 billion of Chinese goods.
The United States has levied tariffs on a total of $250 billion of Chinese imports, global steel and aluminum imports, and shipments of washing machines and solar panels since January 2018, when Trump's administration levied its first trade tariffs.
Trump has referred to himself as a "Tariff Man" and says the duties he has imposed on a range of goods and metal imports are filling up state coffers.
Through mid-March, Washington netted $15.6 billion through tariffs imposed since February 2018, according to data from U.S. Customs and Border Protection (CBP). Customs duties receipts in the first half of the current fiscal year, which began on Oct. 1, have shot up by 89 percent from a year ago to $34.7 billion, data from U.S. Treasury shows.
WHO IS PAYING THE TARIFFS?
Trump says China foots the bill for U.S. tariffs on imported Chinese good.
"For 10 months, China has been paying Tariffs to the USA" he wrote on Twitter on Sunday.
"We have billions of dollars coming into our Treasury - billions - from China. We never had 10 cents coming into our Treasury; now we have billions coming in," he said on Jan. 24.
PAID AT CUSTOMS
A tariff is a tax on imports. The CBP typically requires importers to pay the duties within 10 days of their shipments clearing customs.
So the tariffs are paid to the U.S. government by importing companies. Most importers of Chinese-made goods are U.S. companies, or the U.S.-registered units of foreign companies that import goods from China.
Every item imported into the United States legally has a customs code. Importers are expected to check the tariffs and other taxes and duties due on the goods they bring in, calculate what they owe, and pay it.
The CBP reviews the payments. If it discovers an underpayment, U.S. customs will send the importer a fresh bill.
DO U.S. IMPORTERS PASS ON THE COSTS OF TARIFFS TO THEIR SUPPLIERS IN CHINA?
Some of them do, yes. So Chinese companies pay some of the cost. An importing company paying tariffs can manage the cost in several ways:
1. Pay the full cost and live with a lower profit margin.
2. Cut costs to offset higher tariffs.
3. Ask suppliers in China for a discount to help offset the higher tariffs.
4. Seek to source supplies from outside China. So some Chinese companies are losing business.
5. Pass the tariff costs on to customers by increasing retail prices. Most importers could use a mix of those options to spread the cost between suppliers, themselves, and consumers or buyers.
HOW DOES THAT ACTUALLY WORK?
For example, higher duties on imports of metals and Chinese products increased Caterpillar's production costs by more than $100 million last year. In response, the heavy-duty equipment maker increased prices for its products.
Tractor manufacturer Deere & Co estimates a $100 million increase in its raw materials costs this year because of Trump's tariffs on Chinese imports. Deere has cut costs and increased prices to protect its profits.
A Congressional Research Service report in February found that the tariffs had led to an increase of as much as 12 percent in the price of washing machines in the United States, compared to January 2018 when the duties were not in effect.
According to a study by the Peterson Institute for International Economics, the steel and aluminum tariffs increased the price of steel products by nearly 9 percent last year, pushing up costs for steel users by $5.6 billion.
Separately, a study by the Federal Reserve Bank of New York, Princeton University, and Columbia University concluded that the Chinese and steel and aluminum tariffs cost companies and consumers $3 billion a month in additional taxes and companies a further $1.4 billion in efficiency loses in 2018.0
WHAT DO CHINESE FIRMS PAY?
China has retaliated against U.S. tariffs by imposing its own tariffs on imports from the United States.
Most importers in China are Chinese. So in the same way the U.S. government is receiving import taxes on Chinese goods from U.S. importers, the Chinese government is receiving taxes on U.S. goods from Chinese importers.
WHAT'S THE TOTAL BILL?
Trump has imposed a 25 percent tax on $50 billion of Chinese goods, and a 10 percent tax on goods worth $200 billion more. That, in theory, would mean the U.S government would receive a total of $32.5 billion per year on top of whatever duties were already in place.
U.S. tariff revenue in 2018 was $49.7 billion. That was up 41.2 percent from the $35.2 billion in 2017 before the trade wars started.
China has imposed 25 percent tariffs on $50 billion of U.S. imports, and also has tariffs of 5 to 10 percent on $60 billion more. That equates to around $15.5 billion to $18.5 billion in tariffs.
Chinese tariff revenue in 2018 was 284.8 billion yuan ($42.41 billion), down from 299.8 billion yuan ($44.65 billion) in 2017.