White House Follows Through With Tariff Hikes On Chinese Imports
STEVE INSKEEP, HOST:
It will take time for Americans to feel any difference, but U.S. tariffs on Chinese goods rose overnight. Taxes that Americans pay on some, though not all, Chinese goods rose from 10 to 25%. The Trump administration took that step, even as Chinese negotiators are in the U.S. for trade talks.
How does this look from the United States and from China? Well, we're going to go to both places - to Scott Horsley, who is NPR chief economics correspondent and is in Washington, also to NPR Beijing correspondent - or rather, NPR correspondent Rob Schmitz, who is in Shanghai.
Gentlemen, good morning.
SCOTT HORSLEY, BYLINE: Good morning.
ROB SCHMITZ, BYLINE: Good morning.
INSKEEP: Or I should say good evening to Rob since you're 12 hours different.
INSKEEP: Scott, let's start with you. How big is the tariff move?
HORSLEY: This is a significant ratcheting up of the pressure by the president. At a minute past midnight, tariffs on some $200 billion in Chinese goods went from 10 to 25%, so that's more than doubling. The president is hoping this will put pressure on the Chinese negotiators to cut a deal. The president tweeted this morning that the talks with China are continuing in what he called a very congenial manner. But he also doesn't see any great urgency to dial back these tariffs. He thinks they're a source of income for the Treasury, even though most of the bill is paid by consumers and businesses here in the United States.
INSKEEP: Which we're going to talk about more in a moment. But first, let me hear how this looks from the Chinese side. Rob, we've heard that there was a sticking point in recent days, essentially that China backed off some commitments. But then we were told they still want to do things the U.S. wants, but they're reluctant to put their commitments in writing, where they could be seen. How sensitive...
SCHMITZ: (Laughter) Yeah.
INSKEEP: ...Are the public relations for China?
SCHMITZ: Very sensitive. Perception is reality for China's Communist Party, Steve. And it's interesting also that China still wants to look like it's trying to compromise and be nice about these negotiations with the Trump administration on a trade deal. And from what we know, Xi Jinping himself is likely behind the - China's unwillingness to give up much more at this point. And Xi is very well aware that he's in a showdown with President Trump on a global stage. And it's important to him that his audience, both at home and throughout the world, sees a tough China that's willing to fight back.
INSKEEP: How sensitive are the politics for the Trump administration, Scott Horsley?
HORSLEY: The president also wants to be seen as a tough negotiator. And he, I think, feels like he has room to run here. The U.S. economy grew at a better-than-expected pace in the first quarter - 3.2%. We had a real strong jobs report that came out the end of last week. I think he feels like the U.S. economy is in good shape. The Chinese economy may be more vulnerable. So this is a good time for him to push his case.
INSKEEP: Although, let's circle back to that question of who pays here, Scott, because you said that U.S. consumers pay most of the price. We heard an example of that elsewhere in today's program from Robert Daly, who is a China specialist at the Woodrow Wilson Center for Scholars here in Washington, D.C. And if these tariffs continue to get higher and higher and higher, he talked about one possible consequence for American consumers. Let's listen.
ROBERT DALY: It's been estimated that costs of apparel and clothing for a family of four could go up by $500 if we put 25% tariffs on all remaining Chinese imports, as has been threatened.
INSKEEP: OK. We're not quite to that point yet, Scott Horsley, but aren't there Americans already feeling some effect here?
HORSLEY: They are. Although, up until now, the administration has taken pains to try to sort of cordon off consumer goods. So the cost of these tariffs has mostly been kind of hidden in wholesale supply chains and, you know, at the producer level. If, in fact, the president follows through on his threat to expand the tariffs to the remaining 300 billion-plus of Chinese imports, then you'd really start to see it hitting everything on the shelves at Walmart and Target that consumers buy. And it would be perhaps more obvious to American consumers how this is affecting their pocketbooks.
INSKEEP: And then, Rob Schmitz, I'm trying to figure out why China cares if it's American consumers who end up paying the tariffs. But maybe we're getting at it here. Even if Americans are the ones paying the tariffs, maybe at some point, when the price of clothing goes up, they end up buying less Chinese stuff.
SCHMITZ: That's exactly right. And I think that the short-term impact will hit the U.S. In the longer term, if these tariffs stick, those supply chains will be forced to move out of China. And when that happens, the damage to China's economy may start to feel a little more real. You're going to have Chinese assembly workers and truck drivers looking for work. You'll have smaller suppliers that sold the raw materials to these U.S. companies losing some of their clients. It's - would damage an already sluggish Chinese manufacturing sector that employs tens of millions of people.
INSKEEP: When you say a sluggish economy, or a sluggish manufacturing center in China, what does it feel like? Does it feel like economic trouble where you are?
SCHMITZ: Yes. In places like the Yangtze River Delta and the Pearl River Delta, near Hong Kong and Shenzhen and those places, for years you've seen a slowdown. And a lot of this has to do with labor prices and just a natural evolution of China's economy. But a lot of this is also because of, you know, the manufacturing is - the manufacturing sector is losing a lot of ground.
INSKEEP: OK. Whole lot of context for trade talks that continue today in Washington. Rob Schmitz in Shanghai, thank you very much.
SCHMITZ: Thank you.
INSKEEP: And we also heard from NPR chief economics correspondent Scott Horsley here in Washington. Scott, thanks to you.
HORSLEY: You're welcome.
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