Here’s How Much Money The US Government Is Making Off China Tariffs
The U.S. government has found itself a new cash cow: China. By slapping tariffs on more than $200 billion worth of Chinese imports, the U.S. government has made $55 billion, up $19.9 billion from 2017, according to the Treasury Department.
Last month, the U.S. collected $5.08 billion from China imports, 89.8% more than February 2018. Once the government gets hooked on new sources of revenue, it is hard to imagine them reversing course, and giving it back.
China-U.S. trade talks are ongoing. No new developments have come out of the discussions, with the possibility of a meeting between President Trump and Xi Jinping still tentative for April. Any failure to reach an agreement could add another $30 billion of additional duties to China, namely automotive, Panjiva research analyst Chris Rogers said on Tuesday.
China was hit with three rounds of tariffs since Trump took office.
They started last year with Section 201 Trade Act duties — or temporary import relief — for Chinese made washing machines and solar panels in January and continued with Section 232 duties on steel and aluminum imports worth $46.9 billion in March. September was the mother lode with Section 301 tariffs on Chinese imports worth an aggregate $200 billion. The tariffs on that section of imports was supposed to jump from 10% to 25% in March but Trump agreed to extend the 90-day trade truce reached in November at the G-20 Summit in Argentina.
More money may be coming via trade war tariffs. And it’s not just from China.
Trump is expected to decide on tariff rates for automotive imports by May 17. U.S. imports of cars and car parts from countries outside of Nafta were worth $168.5 billion in 2018. The highest reported level of duties of 25% could be imposed on cars, which would be worth $27 billion in new tariff cashflow, and on components where the tariffs could be worth $15.2 billion.
The trade war has been quiet these past few days. Some people in China, like former Chinese central bank monetary policy committee member Li Daokui, think the Trump Administration will even try to set up a new World Trade Organisation with Europe and exclude China during the 2019 meeting of the Group of 20 nations in Osaka in June. “If this happens, China will not apply to join,” Li said.
Doesn’t matter. They wouldn’t be invited.
Li told the South China Morning Post on Tuesday that China braced for the worst once Trump won.
“He is new, from outside political institutions. Trump does not believe in a lot of things,” says Li. “He will try, but he will be burnt.”
A study by the Peterson Institute for International Economics found that Section 232 tariffs increased the price of steel products by 9%. Steel users will pay an extra $650,000 for each job created, according to a recent study published by the organization. Another study by the Federal Reserve Bank of New York, Princeton University, and Columbia University found that Section 301 and 232 tariffs cost companies and consumers $3 billion a month in additional taxes and companies a further $1.4 billion in other loses. They also were causing the diversion of $165 billion a year in trade, leading to significant costs for companies having to reorganize supply chains.
The Coalition of American Metal Manufacturers and Users said in a statement on Tuesday that it was urging Trump to scrap steel and aluminum tariffs. They said that some manufacturers in their organization were reporting lost business to overseas competitors because of higher domestic steel prices and long wait times for U.S. steel due to supply constraints. Hundreds of U.S. companies have applied for exemptions to tariffs over the last year, but very few, if any, have gotten them. Some countries, however, have been exempted, including steel exporter Brazil.