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Trump finally acknowledges his tariffs could hit consumers

‘We are doing this for the Christmas season,’ Trump said as he announced a delay on his latest import taxes

President Trump on Aug. 13 said he delayed some new tariffs on Chinese imports to protect consumers from higher prices during the Christmas shopping season. (Video: Reuters)

President Trump has repeated the same mantra for months: The Chinese are paying the full price of his tariffs. It’s a line that the overwhelming majority of economists and business owners say is false, but Trump kept saying it — until Aug. 13.

The White House announced Tuesday that the president’s latest tariffs on China would be delayed on many popular items like cellphones, laptops and strollers. The 10 percent tax would not go into effect until Dec. 15, effectively ensuring retailers can import goods for the holidays before the tariffs take effect.

Trump himself told reporters the delay is to ensure consumers don’t face higher costs this Christmas. Here are his full remarks:

“We are doing this for the Christmas season, just in case some of the tariffs would have an impact on U.S. consumers. So far they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China, compliments of China. But just in case they might have an impact on people, what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,” Trump told reporters before he flew to western Pennsylvania.

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He used qualifying phrases such as “just in case” and “might have,” but his words — and actions — are a noticeable change from his insistence that the Chinese are paying the full cost of his tariffs. (Note that the harm to American farmers comes from China’s counter-tariffs, which Trump has sought to offset with a bailout targeting farm country.)

“The decision to delay new tariffs on Chinese-made toys, smartphones, laptops and other popular holiday gifts is a tacit admission that consumers pay for tariffs, not Chinese producers,” said Ryan Young, a senior fellow at the Competitive Enterprise Institute.

An American family of four would pay about $350 more a year if the full cost of Trump’s latest tariffs was passed to consumers, according to the Tax Foundation. While inflation — a measure of rising costs — has remained low in the United States, the latest data out Tuesday showed some pickup, mainly from increases in gas and rent. A Goldman Sachs analysis also found items that have had tariffs placed on them are seeing costs rise.

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“Trump didn’t want to be the Grinch that stole Christmas,” said Phil Levy, a former economist in the George W. Bush administration who is now chief economist at Flexport, a freight and logistics company. “This seems to me like the administration is retreating.”

Trump and his policy adviser Peter Navarro have said that China has devalued its currency enough to compensate for the cost of the tariffs, but U.S. companies point out that the devaluation doesn’t cover all the tax and many contracts with Chinese manufacturers are executed in dollars, not yuan.

Trump’s latest round of tariffs is different from his prior ones. The earlier rounds mainly went on component parts that manufacturers such as auto companies bring into the United States to assemble into final products. Many U.S. companies opted to absorb a lot of the added costs, effectively canceling out some of Trump’s corporate tax cut, instead of passing the higher cost on to consumers.

But Trump’s push to put a 10 percent tariff on another roughly $300 billion worth of Chinese imports by the end of the year will mainly hit finished goods like shoes and iPhones that are assembled fully in China and then shipped to the United States. Business owners say it’s a lot more difficult to absorb those costs or find ways around them.

Trump insisted Tuesday that his tariffs are working — both by helping the U.S. economy and forcing the Chinese to negotiate.

“The stock market is way up today for various reasons, including tariffs,” Trump said.

He lauded a phone call Monday between top Chinese and U.S. negotiators as a step forward in the discussions. Chinese officials are planning to come to the United States in September.

“I’m not sure if it was the tariffs or the call, but the call was very productive,” Trump said, implying his last round of higher import taxes is yielding results.

Many economists and business leaders, however, said the tariff delay does little to mitigate the uncertainty surrounding Trump’s trade policy that is weighing heavily on the economy.

“We are all just one tweet away from significant volatility,” wrote Joe Brusuelas, chief economist at RSM in a note to clients. “The idea that this is a major source of relief to the economy is not tethered to empirical reality.”


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