US will suffer from tariffs, Trump aide Larry Kudlow admits

One of Donald Trump’s top economic advisers has acknowledged the president was wrong to suggest that China would pay tariffs on its exports to the US.

Larry Kudlow, who heads the National Economic Council, accepted it was US businesses that paid the import tax.

He told Fox News that he believed “both sides will suffer” from the escalating trade dispute.

On Friday Mr Trump tweeted that tariffs on $250bn of goods coming into the US were being paid “by China”.

The president argued there was “no need to rush” into a trade agreement with China, as the US Treasury was benefiting from these “massive payments”.

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Donald J. Trump

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@realDonaldTrump

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. These massive payments go directly to the Treasury of the U.S….

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7:43 PM – May 10, 2019

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End of Twitter post by @realDonaldTrump

However, in an interview with Fox News Sunday, Mr Kudlow admitted that it was American businesses that paid the tariffs on any goods brought in from China, and that US consumers would also foot the bill if firms passed on the cost increase.

Mr Kudlow said he thought the tariffs would also have an impact on China’s economy, as the higher cost would reduce US demand for Chinese goods.

“Both sides will suffer on this,” he said.

Last year the US imposed a 10% tariff on $200bn worth of Chinese products – including fish, handbags, clothing and footwear.

The firms paying the additional tariff can choose to absorb it themselves, pass it on to consumers in the form of higher prices, or ask their suppliers to reduce their prices.

Last week the US said it was increasing tariffs from 10% to 25% on $200bn (£153.7bn) of goods from China. President Trump said Beijing “broke the deal” by backtracking on earlier commitments to change its policies. Read more

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