Trump on Wednesday again said he is “very happy with over $100 Billion a year in Tariffs filling U.S. coffers . . . great for U.S., not good for China!”

Economists say the president is persistently wrong about how tariffs work: American importers and consumers have borne the brunt of the duties he has imposed so far — and will continue to shoulder the burden if Trump follows through on his threat.

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Further, they say, the scale of the fight he’s proposing to mount against the world’s second-biggest economy will bring fallout at home for the economy as a whole and compound pain for key industries and consumers.

The overall impact of the new tariffs would not be enough, say, to drag the U.S. into a recession. But it would have a measurable impact on economic growth, said economists I interviewed.

Joel Prakken, chief U.S. economist for Macroeconomic Advisers by IHS Markit, projects a .1 percent hit to GDP growth this year and next if the new tariffs are implemented. Others say it will be greater: Ryan Sweet, director of real-time economics at Moody’s Analytics, estimates a .3 percent impact.

“That’s not enormous,” he says, but he points to “spillover effects,” including newly turbulent financial markets that could in turn rattle business confidence, slowing new investment. “The economy’s fundamentals overall are solid, and the odds of a recession are low. The risk is we talk ourselves into one.”

And the relatively modest macro effects of the tariffs may be cold comfort to those businesses in the crosshairs and consumers set to face higher prices on goods from soap to air conditioners. The new levies “would apply 25% levies on more than $40 billion worth of items purchased directly by consumers — furniture, handbags, clothing, Christmas decorations, fire alarms and other things shoppers find on the shelves at Target, Walmart, Macy’s and other stores,” the Wall Street Journal’s Josh Zumbrun wrote this week.

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American shoppers already have been facing higher prices from the levies the Trump administration has so far imposed. A study published in March from economists at the Federal Reserve Bank of New York, Columbia University and Princeton University found that in 2018, Trump's tariffs were costing consumers and the firms importing targeted goods an extra $3 billion a month in extra taxes.

The burden has been particularly acute for certain key sectors, including auto parts companies, which help form the manufacturing base in Ohio.

“Their costs have gone up because of steel and aluminum and other electronics we buy from China,” says Chad P. Bown, a senior fellow at the Peterson Institute for International Economics in Washington. “The end user probably isn’t willing to eat all of those costs, so the companies are doing less well, and the workers for those companies aren’t going to do as well and won’t see wage increases they might have gotten.”

Business chiefs are warning the pain will only get worse if Trump escalates the battle.

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Polaris Industries CEO Scott Wine, whose company makes snowmobiles, ATVs, and motorcycles, said Tuesday the escalation would be “catastrophic” for his business. “Through no fault of our own, one-third of our net income could go away,” he told CNBC.

Emerson Electric Co., a large manufacturer that produces everything from climate control systems to garbage disposals, has raised prices to keep up with higher costs from the tariffs, but its commercial unit has still seen its profit margins shrink. The company estimated tariffs on the books would cost it $125 million this year. The latest ISM manufacturing survey is littered with executives citing tariff worries, though others say they've already priced in a possible escalation.

The damage would be compounded by the moves Beijing makes to strike back. Chinese officials on Wednesday pledged to launch “necessary countermeasures” if the Trump administration goes through with the Friday escalation.

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It’s not clear yet what those might be. But farmers have already gotten a taste. Beijing has slapped steep tariffs on American soy, corn and wheat exports; after Trump’s Sunday tweets, grain markets dropped to a 42-year low. Farmer bankruptcies, meanwhile, have been soaring, in part due to tariff pressures — rising nearly a third in six Midwestern states last year.

Yet even as the next round of Trump tariffs look imminent, the administration appears to have left itself some wiggle room to extend this week’s negotiations without implementing them.

The Trump team’s official notice of the new levies carves out any shipments already on their way here from China when the tariffs would take effect. “They didn’t put this language in there when they made these announcements last year,” Bown notes, speculating it could be an attempt to buy some extra time for the talks.

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TRUMP TRACKER

TRADE FLY-AROUND:

— China fires back: Beijing made it clear it is not backing down in the face of Trump’s threats. In fact, China warned it stands ready to retaliate in the escalating trade war, my colleague Anna Fifield and David J. Lynch report.

“The trans-Pacific brinkmanship now spills over to face-to-face negotiations as trade talks resume late Thursday in Washington — just hours before Trump’s latest tariff threats are due to hit $200 billion in Chinese products,” Anna and David write.

China’s statement: “An escalation in trade frictions is not in line with the American or Chinese interests or the interests of the world, and would thus be much to China’s regret,” a spokesman for the Commerce Ministry said in a statement “An escalation in trade frictions is not in line with the American or Chinese interests or the interests of the world, and would thus be much to China’s regret,” a spokesman for the Commerce Ministry said in a statement on its website

But the reality in China is not as rosy as state media attests. “Trade data released Wednesday showed that Chinese export growth was disappointing last month. The value of Chinese exports fell 2.7 percent in April compared with the previous year, against market expectations of 3 percent growth,” Anna and David write.

The Chinese have taken a harder line because they thought Trump was desperate for a deal. The suddenly tougher posture from Beijing owes to an April 30 tweet by Trump complaining that while the Chinese central bank is helping stimulate growth there, the Federal Reserve is raising interest rates, according to reporting by the WSJ's Lingling Wei and Bob Davis. Chinese negotiators took that as a sign that Trump viewed the U.S. economy as fragile and would be eager to compromise.

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Trump: "They broke the deal." The president, addressing a rally in Florida on Wednesday night, via Reuters: "You see the tariffs we’re doing? Because they broke the deal. ... They broke the deal. So they’re flying in. The vice premier tomorrow is flying in, but they broke the deal. They can’t do that. So they’ll be paying. If we don’t make the deal, nothing wrong with taking in more than $100 billion a year.”

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— Huawei executive gets new bail terms. “A Canadian judge on Wednesday altered the bail terms of a Chinese tech executive facing possible extradition to the United States on fraud charges, granting her lawyers’ request that she be allowed to move from a $6 million, six-bedroom house in Vancouver to a $16 million, seven-bedroom mansion,” the New York Times’s Dan Bilefsky reports.

Diplomatic difficulties: The case of Meng Wanzhou, chief financial officer of the Chinese tech giant Huawei, has placed Canada in the precarious position of trying to mediate between the U.S. and China.

Trump’s role: The president previously said he was willing to “intervene” in Meng’s case, comments that Meng’s lawyer, attorney Scott Fenton, said he would use to prove the charges are politically motivated and they were “‘intimidating and corrosive of the rule of law’ and should disqualify the United States from being able to extradite Ms. Meng,” Bilefsky writes.

Meanwhile, Trump appears to be losing the battle to ban Huawei gear from global networks, Bloomberg reports.

New York lawmakers advance bill allowing release of Trump’s state tax returns: “The New York State Senate passed legislation Wednesday that would allow President Trump’s state tax returns to be turned over to congressional committees, a move that could pave the way for House Democrats to obtain the president’s closely guarded financial records,” my colleague Jeff Stein reports. “The bill must still be approved by the State Assembly and signed by Gov. Andrew M. Cuomo (D-N.Y.), but Cuomo has expressed support for the measure and Democrats have a majority in the legislature’s lower chamber.”

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It's worth emphasizing the legislation is about state returns. If passed, lawmakers would not have access to the returns House Democrats are seeking, but Jeff writes, “the state returns could provide an unprecedented look into Trump’s New York business dealings, his income, and a range of other personal financial information, according to legal experts.”

MARKET MOVERS

— Global stocks flinch in face of trade tensions. WSJ's Paul Davies: "European and Asian stocks fell Thursday as China hardened its line going into trade talks set to start later in Washington. Shares across Asia fell with Chinese A-shares down 1.5% in Shanghai, the Hang Seng in Hong Kong 2.4% lower and Korean stocks down 3%. The Stoxx Europe 600 was 0.7% lower in early trade, while the FTSE 100 in London was down 0.5%.

"U.S. stocks were priced to open lower on Thursday with futures on both the S&P 500 and Dow Jones Industrial Average down about 0.8%. The broad index was down 0.2% at the close on Wednesday, having been up as much as 0.5% earlier in the day."

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But it could be worse. The S&P 500 was down 2.2 percent over the first three days of this week, "only about a month’s worth of gains; markets were lower as recently as early April," the New York Times's Neil Irwin points out. He cites a "Trump Put" bucking up investors even as U.S.-China trade talks look to be deteriorating this week. That is, investors believe Trump keeps an eye on the health of financial markets and will strike "some kind of deal, even if it does little to address long-term economic tensions between the United States and China," to reverse a market rout.

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— Bond market sends up a warning flare. Bloomberg's Robert Burgess: "Global markets got a glimpse of the unthinkable Wednesday when the U.S. held a key bond auction. The $27 billion sale of 10-year notes – the world’s benchmark securities – didn’t go well at all. It wasn’t a failure; that would have triggered no less than an Armageddon-type event on par with the financial crisis. But the poor demand sure sparked a lot of questions, including whether this was a sign that investors finally had enough of the government’s profligate spending and borrowing...

"Nothing scares big investors more than the notion that the U.S. could hold a bond auction and nobody showed up. After all, Treasuries are the world’s safest investment, backed by the full faith and credit of the U.S. But on Wednesday, investors sent a message to the Treasury Department that past isn’t prologue when it comes to demand for U.S. debt.

POCKET CHANGE

Prescription drug ads will soon have to include pricing information. "Health and Human Services Secretary Alex Azar said Wednesday that the Trump administration is finalizing rules for drugmakers to disclose list prices of medications costing more than $35 for a month’s supply,” the Associated Press’ Ricardo Alonso-Zaldivar reports.

Pharma responds: ‘We are concerned that the administration’s rule requiring list prices in direct-to-consumer television advertising could be confusing for patients and may discourage them from seeking needed medical care,’ said the Pharmaceutical Research and Manufacturers of America, the industry's main trade group.

What this means: “Drug pricing details are expected to appear in text toward the end of commercials, when potential side effects are disclosed. TV viewers should notice the change later this year, perhaps as early as the summer,” Alonso-Zaldivar writes.

How it would be enforced: “In a twist, enforcement of the rule will rely on drug companies suing each other over violations under a longstanding federal law that governs unfair trade practices,’ Alonso-Zaldivar writes.

Democrats say the policy is not muscular enough and are pushing for more.

Remember: There have multiple reports that House Speaker Nancy Pelosi’s (D-Calif.) staff and the White House are discussing a deal to lower prescription drug prices. Trump made lowering prices one of the centerpieces of his campaign and polls show the issue continues to be among the top concerns of voters. But with everything going on, it’s probably safe to bet that much more limited policies like requiring some price transparency are more likely that a sweeping bipartisan deal.

MONEY ON THE HILL

The Export-Import bank is back … for now. After inspiring some “of the most bitter disputes in Republican circles this decade,” the Export-Import bank now has enough board members to form a quorum again, my colleague Paul Kane reports. “No federal agency has lived such a bizarre state of suspended animation,” Paul sums up of the protracted battle between conservatives and more mainstream Republicans over the future of the agency that provides loan guarantees to U.S. companies doing business abroad.

The debate isn’t over though: The three new board members were confirmed “with near unanimous Democratic support and sizable Republican opposition,” Paul writes.

But that’s not all. The legislation reauthorizing the agency expires this fall.

The future of Fannie and Freddie: “Fannie Mae and Freddie Mac’s new overseer said the mortgage giants can be freed from government control even if Congress doesn’t pass a housing-finance overhaul,” Bloomberg’s Austin Weinstein reports. “Lawmakers will get ‘at least an entire Congress’ to act before the companies are freed, Federal Housing Finance Agency Director Mark Calabria said during an interview with Bloomberg.

Calabria’s comments show a final decision could be pushed past the 2020 election and illustrate just how much “the Trump administration wants “to end the federal conservatorships of Fannie and Freddie, which have been in place since they were seized by regulators and bailed out by taxpayers more than a decade ago,” Weinstein writes.

What happens if Congress doesn’t act: The housing finance giants would lack “a federal guarantee for the trillions of dollars of mortgage securities they issue, as such a backstop requires lawmakers revamping their charters,” Weinstein writes. But Calabria said such a situation would not be calamity: ““I think with a combination of more offset, more off-laying of the credit risk, more capital, we could get to a point where the creditors should feel pretty comfortable that there’s a lot of people in line ahead of them,” he said.” The housing finance giants would lack “a federal guarantee for the trillions of dollars of mortgage securities they issue, as such a backstop requires lawmakers revamping their charters,” Weinstein writes.

But Calabria said such a situation would not be calamity: ““I think with a combination of more offset, more off-laying of the credit risk, more capital, we could get to a point where the creditors should feel pretty comfortable that there’s a lot of people in line ahead of them,” he said.”

DAYBOOK

Today:

The House Ways & Means holds a hearing “Understanding the Tax Gap and Taxpayer Noncompliance."

The National Economists Club holds an event with former Federal Housing Finance Agency official Nayantara Hensel.

THE FUNNIES

BULL SESSION

'Impressive’: How Fox News is talking about Trump’s taxes: