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As President Donald Trump doubles down on tariff threats against China, the price tag of the year-long trade war is climbing for U.S. businesses.
U.S. importers have paid $6 billion in tariffs in June, a 74% jump compared to a year ago, despite a slight decline in the value of imports. And $3.4 billion of that total came from tariffs imposed by President Trump. This is according to research released on Wednesday by the business coalition “Tariffs Hurt the Heartland” in conjunction with The Trade Partnership, a Washington-based trade and economic consulting firm.
The June data highlights the first full month’s impact of Trump raising tariffs on $250 million worth of Chinese goods to 25% from 10% on May 10.
“June was our biggest month yet there in terms of punitive tariffs made,” said Dan Anthony, vice president at The Trade Partnership.
Despite the removal of steel and aluminum tariffs from the 232 Investigation in May, American companies paid about $3.1 billion in tariffs on products subject to Section 301 remedies on China in June, compared to just $411 million in June 2018. Meanwhile, the value of imports from China declined sharply by 36%, as importers look for alternatives in Southeast Asia.
Cost burden will shift to consumers
Trump said imposing tariffs is a tactic to get the Chinese side to the negotiating table earlier. As the trade talks drag on, he uses it to pressure the Chinese to make compromises, although Beijing has repeatedly said it won’t “negotiate with a gun pointed to its head”.
U.S. importers are legally responsible for paying the tariffs as the goods reach American ports. Some importers say they are able to mitigate the previous 10% tariffs due to the devaluation of the Chinese currency yuan. But with a 25% tariff, they have to pass along some costs, eventually to the consumers. In some cases, Chinese suppliers offer a lower price to stay competitive.
Since the beginning of the trade war in 2018, American taxpayers have paid over $27 billion in extra import tariffs, according to The Trade Partnership’s analysis of U.S. Census Bureau data. And the cost will only pile up from here, as Trump threats to impose 10% tariffs on the rest of $300 billion worth of Chinese products starting September 1. China has hit back by stopping the purchase of U.S. agricultural products.
While the next round of trade talks is scheduled next month, some Wall Street analysts are already predicting no trade deal before the U.S. election in 2020. Should this be the case, businesses and consumers will need to brace for greater costs.
“Each subsequent list has shifted more towards products that everyday Americans might buy, And that'll really kick in with the tariffs that have been announced for September 1,” said Anthony. “Those are predominantly products that certain individuals buy for themselves at retail as opposed to chemicals or industrial machinery.”
Correction: Trump's tariffs have cost U.S. businesses $3.4 billion in June. Importers paid $6 billion in total tariffs in June. An earlier headline misstated the number.
Krystal Hu covers technology and China for Yahoo Finance. Follow her on Twitter.