Kudlow said that "both sides will suffer on this," but argued that China will suffer significant GDP losses as export markets are hit. The blow to U.S. GDP, on the other hand, won't be substantial since the economy is "in terrific shape," he said.

White House economic adviser Larry Kudlow on Sunday acknowledged that the Chinese do not directly pay tariffs on goods coming into the U.S., contradicting President Donald Trump 's claims that China will pay for tariffs imposed by the U.S.

"It's not China that pays tariffs," Wallace said. "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."

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

Kudlow added, however, that China doesn't actually pay the tariffs, but that their GDP will suffer "with respect to a diminishing export market."

"This is a risk we should and can take without damaging our economy in any appreciable way," Kudlow said.

TWEET

The most recent round of trade talks, which ended on Friday with no final agreement, followed Trump's decision to more than double tariffs on $200 billion of Chinese goods.

Trump said on Saturday that China should "act now" to wrap up a trade deal with the U.S, warning that "far worse" terms would be offered to them in what he predicted would be his second term as president.

Trump also suggested that the U.S. was "collecting" big tariffs from China.

"Would be wise for them to act now, but love collecting BIG TARIFFS!" he tweeted.

Kudlow said that Trump will likely meet with Chinese President Xi Jinping at the June G-20 summit in Japan.

WATCH: Larry Kudlow on Q1 GDP report