Global stocks plummeted after President Donald Trump announced he would raise tariffs on China. The tariffs are almost entirely paid by American consumers, experts say.
“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. These payments are partially responsible for our great economic results,” Trump wrote, falsely stating that China is paying the tariffs. Numerous studies have shown the tariff increases are passed on to American consumers in the form of added costs.
“The 10% will go up to 25% on Friday,” he added. “325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
Trump’s statement is utterly false. Not only have the tariffs had a massive impact on product cost in the US, but the vast majority of the added costs have also been paid by American consumers.
Stock markets plunge after announcement:
The S&P 500, Nasdaq, and the Dow Jones all plunged by more than 1 percent to open the trading day Monday following Trump’s announcement.
“The Shanghai Composite plunged 5.6%, while Hong Kong's Hang Seng fell nearly 3%. The Stoxx Europe 600 index opened down 1.2%. Oil futures dropped while gold prices increased,” CNN Business reported.
CNN added that China was reportedly considering pulling out of negotiations, as experts say Trump’s threat came as a “big surprise” after weeks of positive developments in ongoing trade talks.
"For now, one thing is almost certain: financial markets will react sharply to the suddenly increased risk of a full-on US-China trade war," UBS economist Tao Wang told the outlet.
Trump keeps lying, Americans are paying for tariff cost -- not China:
Despite Trump’s repeated blatant lies, the tariffs are significantly hurting -- not helping -- the economy and the added costs are being paid by consumers -- not China.
“His assertion generally that the Chinese are paying these tariffs is just simply nonsense. It’s a complete misunderstanding of how tariffs work, because tariffs are paid by the importing company and those companies are overwhelmingly American,” Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, told NBC News. “Ultimately, that means this is a tax paid by the American consumers. The idea that it’s somehow something the Chinese pay is wrong.”
“In theory, the government should be earning $32.5 billion a year on top of what they were already earning. That hasn’t happened. If you look at tariff revenue in 2018, it was only about $50 billion, whereas in 2017, it was about $35 billion. It hasn’t gone up by as much as you’d think,” he added.