Donald Trump has repeatedly claimed that the tariffs he has imposed on China have led to China paying billions of dollars into the U.S. Treasury. No only is he wrong about that, he has it exactly backwards. The cost of those tariffs is a net loser to the treasury and by a wide margin.
Before Trump began imposing tariffs, products from China faced a little under $400 million in tariffs a month. Starting in July, the tariffs just about doubled, reaching $2.6 billion in October and $2.5 billion in November. So subtracting from the baseline of $400 million, that adds up to an extra $6.1 billion in tariffs. Assuming the same trend line, it would be a little over $8 billion through December…
So, in all, Trump can claim a total of about $12 billion in tariffs through December, with $8 billion of that on goods from China.
So that adds up to “billions,” even though it’s no great gift to the Treasury — and as we noted, it’s being paid by Americans. That $12 billion is less than a rounding error in a $3.4 trillion revenue stream.
Those tariffs are not paid by China, they are paid by American companies that import products from China, which means they are passed on to consumers in the form of higher prices. So we are paying for the tariffs, not China. But it’s even worse than that. Even if China was paying for the tariffs, that $8 billion is offset by a huge boost in payments to American farmers and others that Trump has compensated for the lost revenue from his own policies plus the cost of the drop in exports from other countries imposing retaliatory tariffs on our products:
As of December, the government said it will cut nearly $9.6 billion in checks, including $7.3 billion to soybean farmers, $580 million to pork farmers and $554 million to cotton farmers. Up to $12 billion was made available by Trump, and the Agriculture Department also plans to spend $1.2 billion on purchases of surplus food and provide $200 million for trade promotion work by ag export groups.
Meanwhile, exporters have been hit hard by retaliatory tariffs, according to the Census Bureau data analyzed by Tariffs Hurt the Heartland. China imposed tariffs on more than 800 products, accounting for almost all U.S. agricultural and food exports to China, according to the Congressional Research Service. Canada and Mexico are each targeting about 20 U.S. food and agricultural products, while the European Union and Turkey have each imposed retaliatory tariffs on about 40 U.S. agricultural and food products. Bankruptcies in the midwest — the Farm Belt — are at the highest level in a decades, according to the Wall Street Journal.
As of November, U.S. exports have declined by $4.1 billion, or 37 percent, from the previous year, even as exports of products not subject to those tariffs have continued to grow, indicating that unrelated trends, such a strong dollar, are unlikely to explain the decline in exports.
So this is a net loss for both the country and for American consumers, and by a lot, not a little. Trump’s lie has reality flipped precisely on its head. As usual.