Action taken in April by President Donald J. Trump confirms: The tariffs he imposed on China are paid by Americans.
In April, President Donald J. Trump issued an executive order titled “Executive Order on National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments.” It is also known as Executive Order 13916.
The order is opaque: “(b) The Secretary shall consider taking appropriate action under section 1318(a) of title 19, United States Code, to temporarily extend deadlines, for importers suffering significant financial hardship because of COVID-19, for the estimated payments described therein, other than those assessed pursuant to sections 1671, 1673, 1862, 2251, and 2411 of title 19, United States Code.” 1
Unless you know what Section 1318(a) of title 19, United States Code holds, and you know the meaning of the sections that hold exceptions, the executive order doesn’t mean much. The Congressional Research Service can help. 2 In its analysis, it says:
On April 18, 2020, President Donald J. Trump issued Executive Order 13916 to provide the Secretary of the Treasury temporary emergency authority under Section 318(a) of the Tariff Act of 1930 (19 U.S.C. 1318(a), as amended) to extend deadlines for certain estimated payments of taxes, duties, and fees “for importers suffering significant financial hardship because of COVID-19.” Section 318(a) allows the President to authorize the Secretary of the Treasury to extend payment deadlines during a period of national emergency proclaimed pursuant to the National Emergencies Act.
In essence, this allows American importers to delay paying tariffs on imported goods. Paying these tariffs at the time of import — in other words, the normal procedure — would be a financial hardship, according to the executive order.
This goes to the question of who pays tariffs. On the trade war with China, President Trump and his trade advisors say it is China who pays, mostly. On May 5, 2019, the president stated this:
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No! 3
China pays tariffs to the USA, according to Trump.
Recently Peter Navarro, who serves as Assistant to the President, Director of Trade and Manufacturing Policy, and the national Defense Production Act policy coordinator, said this:
“So far, and it will continue this way, China is paying the tariffs, not the American public. Chinese producers pay these tariffs. We have seen this.” 4
Navarro went on to explain that China bears the burden of the tariffs through lower prices, lower exports, and lower profits. The Chinese government, he said, has lower growth, a higher unemployment rate, less tax revenue, and a devalued currency.
China is paying the tariffs, not the American public, according to Trump’s top trade economist and advisor.
But if the claims of Trump and Navarro are true, why do American companies need relief from paying tariffs?
Or, if China is paying the tariffs, why are we giving that country relief from paying?
As Eric Boehm recently wrote:
It took a pandemic for the White House to admit a basic economic reality: Tariffs on goods imported into the United States are paid by Americans. That’s something that pretty much everyone outside of President Donald Trump and White House trade adviser Peter Navarro already knew. But for nearly two years—ever since Trump launched his trade wars in March 2018—the president and his defenders have stubbornly claimed, contra both theory and evidence, that the duties are absorbed by China and other exporters.
Despite that insistence, Trump on April 18 signed an executive order that will grant some American businesses a three-month deferral on paying tariffs. This will provide some “payment flexibility” for American importers facing “significant financial hardship” due to the COVID-19 outbreak and an ongoing economic shutdown, the administration said.
- The White House. Executive Order on National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments. April 19, 2020. Available at https://www.whitehouse.gov/presidential-actions/executive-order-national-emergency-authority-temporarily-extend-deadlines-certain-estimated-payments/. Or, in the Federal Register, see Executive Order 13916 of April 18, 2020, available at https://www.federalregister.gov/documents/2020/04/23/2020-08846/national-emergency-authority-to-temporarily-extend-deadlines-for-certain-estimated-payments. ↩
- Congressional Research Service. TemporaryDeferment of Import Duty Payments. April 30, 2020. Available at https://crsreports.congress.gov/product/pdf/IN/IN11371. ↩
- Twitter, available at https://twitter.com/realDonaldTrump/status/1125069835044573186. ↩
- Fox Business Network. Peter Navarro: Chinese producers pay for these tariffs. Jun 21, 2019. Video available at https://youtu.be/QS789wEu4Mg. ↩