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Tuesday, August 13, 2019

Why would the tariffs hurt Christmas shopping if the Chinese are paying the tariffs?

by digby

Maybe someone could ask him to explain this. It really doesn't make much sense does it?

Fox News has no problem with it:

The Washington Post's Philip Bump analyzes the stupidity so you don't have to:

We can walk through DeAngelis’s comments almost line-by-line to point out where she’s incorrect.

“It’s interesting,” she says at the outset, “because there’s been a narrative here with two sides. On one side, you have the president saying tariffs are a good thing. China is paying them. On the other side, you have the opposition saying, ‘Well, there’s no evidence that China is actually paying these tariffs, and we really think the consumer’s going to end up paying them.’”

We’ll evaluate the accuracy of that point-counterpoint in a second. But before we do, let’s marvel at the fact that it’s a point-counterpoint at all.

On one side, you have people saying that Earth is flat. On the other side, you have people saying that it is some sort of ball or sphere.

On one side, you have people saying that airplanes fly by virtue of airlines hiring ghosts who carry the aircraft in an ethereal satchel slung over their ectoplasmic shoulders. On the other side, you have people who say something about air pressure.

I could do this all day. These are ridiculous examples meant to highlight that it is not the job of a reporter to present something with an obvious answer as a choice between two juxtaposed lines of argument. It is, instead, to explain what’s actually happening.

Here’s the amazing thing, though: In this case, DeAngelis goes on to advocate the incorrect position.

“Well,” she continued, “the Treasury Department just released some data that actually bolsters the president’s argument. Treasury is saying that, so far this fiscal year, China has paid us $59 billion in tariffs, and that number is up about 75 percent, year on year.”

There’s a lot that’s wrong in that last sentence. The Treasury Department did release data on how much the government has collected from tariffs, which are essentially taxes imposed on imports to the United States. Fox Business, for which DeAngelis works, reported on the new numbers.

“As the U.S. prepares to implement another round of tariffs on China next month, new data shows just how much the government is collecting from the cumulative levies it has imposed on goods from other countries,” the network’s Brittany De Lea wrote. “According to a report from the U.S. Treasury Department released on Monday, for the fiscal year-to-date, the U.S. has collected $59 billion from tariffs — an increase of 75 percent from the same period last year.”

Notice the key phrase: “goods from other countries.” The $59 billion isn’t money from China. It isn’t even money from Chinese tariffs. It’s money from all tariffs.

A report from the Wall Street Journal last week (which is also owned by the parent company of Fox News) looked at tariffs collected on Chinese imports through June. Even before Trump added new tariffs, the government was taking in $2 billion to $3 billion a month from tariffs, or about $24 to $36 billion a year. In June, the government collected $3 billion on imports from China out of about $6 billion in total. The new Treasury data puts the July tariff total at $7 billion, suggesting that the amount collected last month on products from China might have been closer to $4 billion.

But this is not money paid by China. As both the Journal and Fox Business articles note, much of the cost of tariffs is incurred by importers, which often increase the cost of products to recoup costs. Analysis by the Center for Economic Policy Research found that the original round of Trump’s tariffs were costing Americans (consumers and importers) about $3 billion a month in additional tax payments. Suppliers were paying an additional $1.4 billion by shifting supply chains away from components that were now more expensive.

We’ve looked at the balance for businesses before, including in the context of a pro-Trump teddy bear that’s imported from China. Its manufacturers explained that they would simply absorb the cost of new tariffs if applied to imported stuffed animals, cutting into their already thin profits.

In some cases, Chinese companies will absorb some of the cost of tariffs in order not to lose business with American companies. But that’s only part of what’s paid — and it’s not money coming from China itself.

DeAngelis continued, framing her incorrect assessment of the tariffs in a way that more broadly reflected Trump’s rhetoric.

“Now to put this in context in terms of total federal income, it’s only about 2 percent,” she said. “But it’s still a pretty significant number. Now, the $59 billion is hopefully going to be reinvested in businesses and infrastructure to make the United States stronger and less dependent on China.”

It’s about 1.6 percent of the revenue the government is expected to raise this year, but, again, that’s all tariffs. And only somewhere around half of that amount is increased revenue from Trump’s tariffs.

As for the government reinvesting tax money in businesses? Seems like that might be problematic for Fox News personalities who consistently express concern about socialism. But it has been reinvested heavily in one industry: farming, which Trump has had to bolster with subsidies because it has been hammered by retaliatory tariffs imposed by China.

“But, of course, the fear was that Chinese companies were going to hike prices and U.S. consumers were going to be on the hook for most of it,” DeAngelis went on. “It doesn’t seem like that’s happening.”

It … does seem like that’s happening. It is happening. The Journal reported separately on a study finding that the average American household is contributing more than $800 to pay these increased tariffs — even before Trump expanded them.

“Remember, China doesn’t necessarily want to do that,” DeAngelis said of increased costs. “It can’t afford to stop selling things here in the United States, and it can’t afford a chilling effect.”

She summed things up.

“So here’s what I’m seeing from the floor: Second-quarter earnings are starting to come through, and you’re not hearing companies say that they’re worried about China or that China impacted the bottom line. And that’s really the important thread of this story. We’re taking money in. U.S. companies aren’t saying they’re being hurt by it.”

DeAngelis is talking to the wrong companies. Concerns about the trade war and the increased cost of doing business with China has spooked a number of companies, some of which are slowing down on hiring as a result. Markets have slipped over the past month. Companies reliant on imports, such as retailers, may be downgraded by ratings agencies.

She’s right that the government is taking money in — just as it does every April when people pay their income taxes.

“So this could be an interesting trade strategy that everyone pooh-poohed against, that actually plays out in real time,” DeAngelis concluded.

Not everyone pooh-poohed it, even when it deserved to be pooh-poohed.


Trump's favorite news organization is a propaganda outfit. And about 40% of the American public believe it.