Trump said he will raise tariffs on $250 billion in Chinese goods to 30% and hike duties on another $300 billion in products to 15%.Politicsread more
Stocks dropped after Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China.US Marketsread more
The final week of August could be highly volatile as markets fret over the economy and the latest developments in trade wars.Market Insiderread more
Federal Reserve Vice Chair Richard Clarida said Friday that the global economy has deteriorated in the past month.Marketsread more
The latest escalation in the trade war ups the odds the economy will fall into recession and that the Fed will aggressively cut rates.Market Insiderread more
Here are the products that stand to be the most affected by China's new tariffs on $75 billion worth of U.S. goods.Marketsread more
"We don't need China and, frankly, would be far better off without them," Trump tweeted.Politicsread more
Recent trade friction between the two Asian powerhouses has morphed into a dispute with political implications that go far beyond the region.Asia Politicsread more
"My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?" Trump wrote amid a series of tweets that rattled markets Friday.Politicsread more
"I would love this to be clarified. We come to a deal on trade, boy, this market is up 10 to 15%, but without it's going to be worrisome," Jeremy Siegel says.Marketsread more
Tesla solar energy systems reportedly ignited at an Amazon warehouse in Redlands, California last June, and the Seattle e-commerce titan confirmed that it has no further plans...Technologyread more
President Donald Trump on Friday claimed a victory of sorts in an ongoing trade war with China, asserting that his latest round of import tariffs on Chinese goods will force China to pay "$100 billion" to the U.S. Treasury.
Not only is Trump overstating the amount of those payments, he's apparently unaware of who pays customs duties.
In fact, the burden of higher tariffs will fall on buyers of Chinese-made products and, ultimately, American consumers. That could end up costing every American household about $800, according to estimates from Oxford Economics.
U.S. and Chinese negotiators resumed trade talks Friday under increasing pressure after Trump raised tariffs on $200 billion in Chinese goods and Beijing promised to retaliate, escalating a trade battle that began last summer.
Trump maintains the U.S. stands to gain from the latest escalation because of the added customs duties that will now flow to the U.S. Treasury.
Tariffs are taxes imposed by the government while duties are what importers have to pay. The two are not equal.
While it's true that duties collected by the Customs Department go "directly to the U.S. Treasury," they are hardly "massive" in terms of the government's overall receipts.
According to Treasury Department data, overall tariff revenue collected in the latest fiscal year — on imports from China and the rest of the world — is just a drop in the fiscal bucket.
In the latest fiscal year, for example, just $41 billion — or about 1% — of the nearly $3.3 trillion in revenues raised by the federal government came from customs duties.
Trump insists the new tariff revenues will amount to $100 billion, more than double the current annual level of customs duties.
Customs duties did increase substantially beginning last July, when the Trump administration's tariffs on China began to take hold. Since then, those revenues have been about $2.2 billion a month higher than the prior year.
Trump has claimed that the U.S. will benefit from higher tariffs on Chinese goods because China will now have to pay higher duties to the U.S. Treasury.
To be sure, a protracted period of higher tariffs on the wider list of Chinese goods would substantially boost the amount of customs duties paid to the Treasury. But that burden would be born by the importers, wholesalers and retailers who sell those goods and, ultimately, by U.S. consumers who buy them.
It's difficult to estimate exactly how that burden would be shared. Some companies in the supply chain may choose to absorb some of the higher cost of importing Chinese goods to avoid passing along price increases that could hurt their market share.
But Trump's higher tariffs on Chinese goods would dampen U.S. economic growth no matter who foots the bill.
Economist Greg Daco at Oxford Economics estimates that the tariffs in place since last year depressed U.S. gross domestic product by about 0.1 percentage point this year. Trump on Friday boosted tariffs on $200 billion of imports from China from 10% to 25%, and if China retaliates, Daco estimates that will cut U.S. GDP by 0.3 percentage point next year, costing the U.S. economy about $62 billion. That comes to about $490 per U.S. household.
The higher tariffs would push U.S. GDP below 2% and dampen employment growth by about 200,000 jobs, according to Daco's estimates.
Trump issued a statement Friday afternoon saying the tariffs his administration imposed earlier that day "may or may not be removed" while trade talks continue.
If the administration follows through on a threat to impose 25% tariffs on all remaining imports from China, and China retaliates, Daco estimates that the U.S. economy would lose about a half percent of GDP growth. That would cost each household close to $800, and lead to 360,000 fewer jobs being created, according to his estimates.