White House Top Economic Adviser Larry Kudlow Undercuts Trump on Tariffs

President Trump’s top economic adviser admitted on Sunday that American companies and consumers would have to pay for new tariffs on Chinese goods—undercutting the president, who has repeatedly claimed that China would somehow be paying for the new penalties directly.

On Fox News Sunday, anchor Chris Wallace pressed the White House’s Larry Kudlow: “It’s not China that pays the tariffs, it’s the American importers, the American companies that pay what, is in fact, a tax increase.”

“Fair enough,” responded Kudlow, though he insisted “both sides will pay in these things.”

On Friday, Trump tweeted that he would hike tariffs on imported Chinese goods as his administration and the Chinese government hit an impasse during negotiations for a sweeping new trade deal.

“Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” he tweeted. “These massive payments go directly to the Treasury of the U.S.”

The new tariffs will not be paid by China and go into Treasury’s coffers: in fact, their cost will be passed on to the American companies and consumers who buy Chinese goods. A March study from leading economists found that Americans have already borne the brunt of tariffs on Chinese goods, which have been in place since last year.

Kudlow argued that China would suffer due to the new tariffs, but not because the costs would somehow be charged to or paid for by them. “The Chinese will suffer GDP losses and so forth with respect to a diminishing export market,” he said.