Tariff Costs Mount for U.S. Companies
American companies that import products are paying record amounts in customs duties as more tariffs imposed by the Trump administration take effect.
Tariff collections topped $5 billion in October, according to data from the Treasury Department and from Census Bureau data analyzed and released by Tariffs Hurt the Heartland, a lobbying coalition of manufacturing, farming and technology groups.
President Trump campaigned on an aggressive trade agenda, and from early this year has imposed or considered tariffs on thousands of products from dishwashers to semiconductors. U.S. revenue from tariffs has begun to build rapidly only in the last few months, as more of the levies have taken effect.
The amount of tariffs being paid by U.S. importers has doubled since May, including an increase of more than 30% from August to October, according to the data. The sum has risen through the year as steel and aluminum tariffs were applied to imports from a growing group of countries, then surged in October, which was the first full month in which U.S. tariffs were in place on a full $250 billion of imports from China.
China and the U.S. struck a trade truce Dec. 1, agreeing not to add or increase tariffs for now. But the tariff rates in place in October will remain in effect, meaning collections are likely to remain high in November and December.
President Trump has touted the surge in revenue his tariffs have brought in thus far. “We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN,” he said in a tweet on Tuesday.
Tariffs are assessed to the U.S. importer of record, meaning U.S. companies that import items from China and the rest of the world directly are the initial parties responsible for paying. The Census Bureau data are based off customs filings, while the Treasury data are based off actual payments.
While some importers will bear the cost of the tariffs themselves, others may be able to persuade their foreign suppliers to cut prices enough to offset the cost and others may pass the higher costs on to their customers.
“We are now seeing the raw data behind the stories of tariff pain that are coming in from every corner of the country,” said Charles Boustany, a former Republican congressman who is the spokesman for Tariffs Hurt the Heartland. “American businesses, farmers, manufacturers and consumers are suffering under the weight of the current tariffs and are reeling from the continued uncertainty over whether they will be increased even further.”
Russell Tiejema, the chief financial officer of Masonite International Corp., a Tampa, Fla. manufacturer of doors, said at an investors’ conference this week that U.S. tariffs would hit about 10% of the $900 million worth of material his company acquires to build its products.
“About half of that, we would be the importer of record, which means that we would be the party liable for tariff remittance,” said Mr. Tiejema. “The other half we acquire from other suppliers who then acquire it upstream from China, but they stand as the importer of record. In both cases, we need to negotiate, wherever possible, price concessions.”
Many U.S. companies are also facing retaliatory tariffs from China — and from Canada, Mexico, the European Union and other countries hit by U.S. tariffs this year on steel and aluminum. Data from the research group the Trade Partnership, which works with Tariffs Hurt the Heartland to assess the impact of tariffs, estimate that more than $1 billion in tariffs were paid on U.S. exports in October, based on the volume of trade of affected goods.
John T.C. Lee, the president of Andover, Mass. MKS Instruments, which makes precision measuring instruments, said at a Nasdaq Investors Conference this week that his company was facing both U.S. tariffs and retaliatory tariffs from other countries. MKS faces $3 million in tariffs on its imports over a year, and $7 million in tariffs on its exports, he said.
“That is most likely going to be borne by the customers,” he said, noting that many had no other options for getting those products, a situation that gives his company more leverage to raise prices.
Even after the recent increase in revenue from tariffs, they account for a small share of government income. Tariffs were the primary source of federal revenue before World War I, but that share has dwindled with the introduction of the income tax and the liberalization of trade. In October, more than 2% of federal receipts came from tariffs, the most in at least two decades.
Source: Dow Jones