During last week’s seemingly random escalation of the trade war with China, President Trump claimed that the increase in tariffs from 10 percent to 25 percent on $200 billion of Chinese-made products will force the country to pay $100 billion to the U.S. Treasury. But like so many tweets from the Donald J. Trump account, that’s not exactly how tariffs work: the levies will be paid by U.S. importers of tariffed Chinese goods, who will take a hit on their profit margins, or, more likely, push those costs onto consumers. According to an Oxford Economics estimate, the tariff increase will cost the U.S. economy $62 billion by 2020, breaking down to up to $800 per household.
Unlike his boss, White House economic adviser Larry Kudlow presented the whole picture of the tariff hike’s impact during his interview on Fox News on Sunday. “Both sides will pay,” Kudlow said, referring to China’s expected losses in GDP due to “a diminishing export market.”
Because of retaliatory tariffs levied on U.S. products by China, some American producers, particularly farmers, could face increased economic difficulties. “Maybe the toughest burden is on farmers, and the agriculture sector, we get that,” Kudlow said. “We’ve helped them before on lost exports. I think we had an authorization of $12 billion. We will do it again if we have to, and if the numbers show that out.”
Despite the president’s trade war casting doubt into an already tumultuous year — hundreds of millions of dollars of crops were lost in the historic Midwestern flooding in March — farmers still want to back the president, according to a New York Times report, providing further evidence that the industry’s support of Trump is based more in cultural positions than economic ones. “Many people are just torn because people want to support the president of the United States,” Nancy Johnson, the executive director of the North Dakota Soybean Growers Association, told the Times. “But it’s very stressful to be in the middle of these very challenging negotiations. Because you’re the person who can’t take hope to the banker to get his loans for operating.”