Top WH adviser Kudlow admits U.S. consumers, businesses pay tariffs

WASHINGTON -- The White House's top economic adviser acknowledged Sunday that U.S. consumers and businesses pay the tariffs the Trump administration has imposed on billions of dollars of Chinese goods, even as President Donald Trump himself insisted in a tweet, incorrectly, that China pays.

"Yes, I don't disagree with that," said Larry Kudlow, the head of the president's National Economic Council, when Chris Wallace, host of "Fox News Sunday," asked him, "It's U.S. businesses and U.S. consumers who pay, correct?"

Kudlow added, "Both sides will pay," but he stipulated China "will suffer (economic) losses" from reduced exports to the U.S., not from paying the tariffs.

Kudlow's admission contradicts many of Trump's comments and tweets to the effect Chinese companies pay the tariffs in what amounts, in the president's view, to a massive transfer of wealth to the United States from China. Yet almost no economist has agreed with Trump's view and fact-checkers routinely brand Trump's assertion false and point out American importers of goods from China pay the tariffs.

Trump has also asserted trade wars are "easy to win," but Kudlow accepted they come with costs for the U.S. economy, though he downplayed the impact.

Treasury Secretary Steve Mnuchin, center, and U.S. trade representative Robert Lighthizer, right, speak with Chinese Vice Premier Liu He, left, as he departs the Office of the United States Trade Representative on Friday in Washington.Andrew Harnik ~ Associated Press, file

On Friday, the Trump administration raised duties on $200 billion of Chinese imports to 25% from 10%, after charging China had backtracked on commitments it made earlier in the talks. The administration has already hit $50 billion of additional Chinese goods with 25% duties.

Later Sunday, Trump reiterated his view in a tweet: "We will be taking in Tens of Billions of Dollars in Tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-Tariffed countries."

Yet Carl Weinberg, chief international economist at High Frequency Economics, a forecasting firm, pointed out many goods made in China aren't manufactured elsewhere. That's why many U.S. importers have little choice but to pay the tariff.

"So if you need that new iPad, it is you who will be paying the import duty, not some worker in China," Weinberg wrote in a research note.

Trump also has threatened to impose import taxes on the remaining $300 billion in Chinese imports, a step Kudlow estimated would take several months to implement.

John Deere Agricultural machinery made by Deere & Co. sits staged for transport Friday near cranes at the Port of Tacoma in Tacoma, Washington.Ted S. Warren ~ Associated Press, file

Imposing those tariffs would affect a wide range of consumer goods -- clothes, shoes, toys, and electronics such as iPhones -- that have been mostly exempted so far and could prompt steep cost increases many Americans would likely notice.

Kudlow, however, said the economic impact of placing tariffs on all Chinese imports would be to cut economic growth 0.2 percentage points, "a very modest number."

Independent economists, though, think the effect would be larger. Gregory Daco, an economist at Oxford Economics, estimates it would reduce U.S. growth by a half percentage point and cost 300,000 jobs.

Kudlow also said the U.S. is awaiting retaliation from China over the increased tariffs, after talks in Washington ended Friday without a deal.

"The expected countermeasures have not yet materialized. We may know more today or even this evening or tomorrow," he told "Fox News Sunday."

Both sides have indicated future talks are likely. Kudlow said Sunday that Chinese officials have invited U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to visit Beijing, though nothing has been scheduled.

Kudlow also said Trump and China's President Xi Jingping may meet in late June at the G-20 international conference in Japan.

On Saturday, Trump tweeted he thought "China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win."

Beijing retaliated for previous tariff hikes by raising duties on $110 billion of American imports. And officials have targeted American companies operating in China by slowing customs clearance and stepping up regulatory scrutiny.

Sen. Rand Paul, R-Ky., told ABC's "This Week" he advised the president to finalize a trade deal with China soon, "because the longer we're involved in a tariff battle or a trade war, the better chance there is that we could actually enter into a recession because of it."

The two countries are sparring over U.S. allegations China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.