IMF experts findings contradict President Trump’s claim that China is footing the trade-war bill.
Companies in the U.S. are paying almost all the costs from Donald Trump’s tariffs on Chinese imports, IMF researchers said in findings that dispute the president’s assertions that China is footing the bill.
IMF researchers found “tariff revenue collected has been borne almost entirely by U.S. importers,” according to the International Monetary Fund’s blog post released Thursday.
“Some of these tariffs have been passed on to U.S. consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins.”
The report concludes what most private economists have argued for months: that China doesn’t pay U.S. tariffs, American consumers and companies do. “Consumers in the U.S. and China are unequivocally the losers from trade tensions,” the IMF paper said.
It’s rare for the IMF to disagree with its largest shareholder, and the paper was released just as the rhetoric in Trump’s trade war with China reaches a boiling point.
“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 May 5.
Trade talks between Beijing and Washington stalled this month as Trump accused China of backing out of a deal that was taking shape. In response, Trump increased levies on $200 billion in Chinese imports to 25% from 10%, prompting retaliation from Beijing.
The U.S. has also released a list of about $300 billion in Chinese goods that could face additional tariffs, including clothing, toys and mobile phones. Those levies, if imposed, would cover essentially all Chinese imports and hit a broader swath of American households.
Earlier this month, White House economic director Larry Kudlow acknowledged “both sides will suffer” from the widening U.S.-China trade war, while predicting that the impact on U.S. jobs and growth from higher tariffs on Chinese goods would be “de minimis.”