By Rajesh Kumar Singh
CHICAGO (Reuters) - With U.S. President Donald Trump's announcement on Thursday of tariffs on another $300 billion of Chinese imports, nearly all goods from China will be subject to import taxes, and Trump says they generate billions of dollars in revenues for the U.S. Treasury from China.
But that is not how tariffs work. China's government and companies in China do not pay U.S. tariffs directly. Tariffs are a tax on imported products and are paid by U.S.-registered firms to U.S. customs when goods enter the United States.
Importers often pass the costs of tariffs on to customers - manufacturers and consumers in the United States - by raising their prices. U.S. business executives and economists say U.S. consumers foot much of the tariff bill.
That was why, immediately after Trump announced his decision, U.S. retailers blasted the move as "another tax increase on American businesses and consumers," which they warned would threaten U.S. jobs and raise costs for American families.
The new levies will hit a wide swath of consumer goods from cell phones and laptop computers to toys and footwear.
Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said the new tariffs would hit U.S. consumers far harder than Chinese manufacturers, who produce 42% of apparel and 69% of footwear purchased in the United States.
Investors are worried that the increase in retail prices will hit consumer spending which has underpinned the U.S. economy, and trade uncertainty makes businesses hold back capital spending.
WHAT THE 'TARIFF MAN' SAYS
Trump says the United States will be "taxing" China until a trade deal is secured. He has called himself the "Tariff Man," often repeating that China pays for U.S. tariffs on its goods.
On May 5, he tweeted: "For 10 months, China has been paying Tariffs to the USA."
HOW TARIFFS REALLY WORK
U.S. Customs and Border Protection (CBP) collects the tax on imports. The agency typically requires importers to pay duties within 10 days of their shipments clearing customs.
From early 2018 through May 1, Washington has assessed $23.7 billion in tariffs, according to data from the CBP.
Total tariff revenue rose by 73% year-on-year in the first half of 2019, to a total of $33.9 billion, according to U.S. Treasury data.
DO CHINESE SUPPLIERS BEAR THE COSTS OF U.S. TARIFFS?
Chinese suppliers do shoulder some of the cost of U.S. tariffs in indirect ways. Exporters sometimes, for instance, may offer U.S. importers a discount to help defray the costs of higher U.S. duties and maintain their contracts and market share.