The Slatest

Kudlow Contradicts Trump, Admits U.S. Businesses and Consumers Pay for China Tariffs

National Economic Council Director Larry Kudlow talks to reporters outside the White House May 03, 2019.
National Economic Council Director Larry Kudlow talks to reporters outside the White House May 03, 2019.
Chip Somodevilla/Getty Images

White House economic adviser Larry Kudlow appears to have diverged from President Trump’s claims that China would pay for a recently-announced tariff increase, admitting during an interview on Fox News Sunday that U.S. companies and consumers would effectively have to shoulder the burden.

During the interview, anchor Chris Wallace said to Kudlow, “It’s not China that pays tariffs. It’s the American importers, the American companies that pay what, in effect, is a tax increase and oftentimes passes it on to U.S. consumers.”

Kudlow replied, “Fair enough. In fact, both sides will pay. Both sides will pay in these things.”

Upon further pressing from Wallace, Kudlow proceeded to acknowledge that while China may suffer from the tariffs, it is in fact U.S. businesses and consumers that have to pay for them. Kudlow argued, however, that the ramifications of the tariffs would be much more severe for China because the hit to the country’s export markets would significantly affect its GDP. He claimed that the U.S.’s GDP would not see similarly damaging losses due to the strength of the economy. Kudlow also noted that Trump would likely meet with Chinese President Xi Jinping at the G20 summit next month in Japan.

Kudlow’s admissions contradict Trump’s narrative that China is somehow paying the U.S. for tariffs. On Friday, the president decided to more than double tariffs on $200 billion worth of Chinese exports after trade talks between officials from Washington and Beijing ended without a deal. “Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” Trump tweeted at the time. “These massive payments go directly to the Treasury of the U.S.” On Saturday, the president wrote, “Would be wise for them to act now, but love collecting BIG TARIFFS!”

Trump has repeatedly made the false claim that China pays for tariffs, which has helped to bolster his assertion that trade wars are “good and easy to win.” However, Democrats and even some Republicans, such as Sen. Rand Paul and former Treasury Secretary Henry Paulson, have expressed dismay over the economic impacts of the tariff strategy.

Trump again touted his China trade strategy on Twitter on Sunday night, hours after Kudlow’s Fox interview aired. He wrote, in part, “We will be taking in Tens of Billions of Dollars in Tariffs from China.”