Donald Trump appears to be at odds with his top economic adviser over whether his trade war with China will harm US businesses and consumers.
Larry Kudlow, the head of the president’s National Economic Council, told Fox News’ Chris Wallace “both sides will pay”.
Hours later, Mr Trump contradicted him, tweeting that “we are right where we want to be with China”.
“Remember, they broke the deal with us & tried to renegotiate,” the US president said.
“We will be taking in tens of billions of dollars in tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-tariffed countries…”
Mr Trump’s remarks are consistent with his long-held belief that imposing tariffs on foreign goods coming into the US will make billions for the country’s economy.
He says it is recompense for the decades in which trading partners have taken advantage of the US, contributing to its trade deficit.
But this view has been dismissed by economists who point out that American importers of goods from China pay the tariffs and US firms exporting to China will also suffer from any tit-for-tat response by Beijing.
Carl Weinberg, chief international economist at forecasting firm High Frequency Economics, said many goods, such as iPads, are only made in China, so contrary to Mr Trump’s assertion, US importers have little choice but to pay the tariff.
On Friday, the Trump administration raised duties on $200bn (£153bn) of Chinese imports to 25% from 10%, after saying China had backtracked on commitments it made earlier in the talks.
The administration has already hit $50bn (£38 billion) of additional Chinese goods with 25% duties.
Wallace asked Mr Kudlow on Fox News Sunday: “It’s US businesses and US consumers who pay, correct?”
“Yes, I don’t disagree with that,” Mr Kudlow admitted, but added that China “will suffer (economic) losses” from reduced exports to the US, not from paying the tariffs.
Mr Trump has also threatened to impose import taxes on the remaining $300bn (£230bn) in Chinese imports, which Mr Kudlow estimated would take several months to implement.
It would likely also raise the prices of clothes, shoes, toys, and electronics such as iPhones – that have so far escaped and would be noticed by many Americans.
Mr Kudlow, however, said the economic impact of placing tariffs on all Chinese imports would be to cut economic growth 0.2 percentage points, “a very modest number”.
Independent economists, though, think the impact would be larger.
Gregory Daco, an economist at Oxford Economics, estimates it would reduce US growth by a half percentage point and cost 300,000 jobs.
Mr Kudlow also said the US is awaiting retaliation from China over the increased tariffs, after talks in Washington ended on Friday without a deal.
Source: SKY NEWS