US President Donald Trump Trump has often repeated that China pays for US tariffs on its goods. 'We have billions of dollars coming into our treasury from China. We never had 10 cents coming into our treasury; now we have billions coming in' he said on 24 January 2019. On 5 May he tweeted: 'For 10 months, China has been paying Tariffs to the USA.'

But that is not how tariffs work.

China's government and companies in China do not pay tariffs directly. Tariffs are a tax on imports. They are paid by US-registered firms to US customs for the goods they import into the United States. Importers often pass the costs of tariffs on to customers - manufacturers and consumers in the United States - by raising their prices.

Chinese suppliers do shoulder some of the cost of US tariffs in indirect ways. Exporters sometimes, for instance, are forced to offer US importers a discount to help defray the costs of higher US duties. Chinese companies might also lose business if US importers find another tariff-free source of the same goods outside China.

White House economic adviser Larry Kudlow has acknowledged that 'both sides will suffer on this' contradicting the president.