by Benn Steil, Author and Benjamin Della Rocca, Author
“China” is “paying billions and billions of dollars” on U.S. tariffs, President Trump said in his debate with Joe Biden on October 22. “And you know who got the money? Our farmers. Our great farmers.”
He is half right.
Since 2018, the president has repeatedly insisted that China pays the tariffs he has imposed on Chinese imports. This claim is false—the tariffs are paid entirely by U.S. importers. His advisers, such as Peter Navarro, knowing the claim is false, have tried to defend him, and the tariffs, by arguing that China pays the tariffs indirectly, through currency depreciation and lowering export prices. These arguments are also false, as well as illogical—since the advisers also claim that such Chinese behavior benefits China and hurts the United States.
The president’s statements do, however, check out on his other point. American farmers have indeed laid claim to nearly all his China tariff revenue, which now totals $66 billion.
In 2018 and ’19, Trump authorized payments to U.S. farmers of $28 billion to offset their losses from Chinese trade retaliation. This year, with farmers struggling under the twin crises of the trade war and the pandemic, bailouts have soared way higher. Trump promised angry farmers another $19 billion in April and $14 billion in September—bringing his bailouts to a grand total of $61 billion. He has pledged to continue these bailouts until the trade war ends.
That trade war has cost U.S. companies many billions in new import taxes (while undermining their competitiveness and increasing consumer prices), yet it has earned the government far less. As the chart above shows, payouts to farmers battered by Chinese retaliation have eaten up over 92 percent of the trade-war tax proceeds.
The president is therefore right when he says farmers “got” his tariff money. That money came not from China, however, but from taxes he imposed on Americans.
Oh, and the border wall? It was not, as the president said at the debate, paid for by a “border tax” on Mexico. It too has been financed entirely by taxes on Americans.
Source: https://www.cfr.org/blog/92-percent-trumps-china-tariff-proceeds-has-gone-bail-out-angry-farmers
