Explainer: who pays the rates of Donald Trump - China and other exporters or American customers?
CHICAGO: American President Donald Trump Said On Sunday He Would Raise Rates To 25 Percent From 10 Percent To $ 200 Billion Chinese Goods .
The United States Has Charged Rates For A Total Of $ 250 Billion Of Chinese Input , global steel and aluminum Input , 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 Input are filling up state coffers .
Through Mid-March, Washington Netted $ 15.6 Billion Through Tariffs Imposed Since February 2018, According To Data From US Customs And Border Protection (CBP). Customs Duties Receipts In The First Half Of The Current Fiscal Year, Which Was On October 1, Shot Up To 89 Per Cent From A Year Ago To $ 34.7 Billion, Data From US Treasury Shows.
Who Pays The Rates?
Trump Says China Foots The Bill For US Tariffs On Imported Chinese Good.
" Since Ten Months China Pays Tariffs To The US," He Wrote Twitter On Sunday.
.... Of Extra Goods That China Sends Us Will Stay Untaxed, But Will Soon Amount To 25%. The Paid Rates ... Https://t.co/TXwRRmoyVO — Donald J. Trump (@realDonaldTrump) 1557072526000
“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 January 24.
Paid At Customs
A tariff is a tax on Input . The CBP typically requires importers to pay the duties within 10 days of their shipments Customs Clean Up .
So the tariffs are paid to the US government by importing companies. Most importers of Chinese-made goods are US companies, or the US-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, US customs will send the importer a fresh bill .
Are American Importers Getting The Cost Of The Rates Forward 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 It Actually Work?
For example, higher duties on Input 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 Input . 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 per cent 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 per cent 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 .
What Do Chinese Companies Pay?
China has retaliated against US tariffs by imposing its own tariffs on Input from the United States .
Most importers in China are Chinese. So in the same way the US government is receiving import taxes on Chinese Goods from US importers, the Chinese government is receiving taxes on US goods from Chinese importers .
What Is The Total Invoice?
Trump has imposed a 25 per cent tax on $50 billion of Chinese Goods , and a 10 per cent tax on goods worth $200 billion more. That, in theory, would mean the US government would receive a total of $32.5 billion per year on top of whatever duties were already in place .
US tariff revenue in 2018 was $49.7 billion. That was up 41.2 per cent from the $35.2 billion in 2017 before the trade wars started .
China has imposed 25 per cent tariffs on $50 billion of US Input , and also has tariffs of 5 to 10 per cent 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 .