- The Washington Times - Tuesday, October 1, 2019

President Trump’s decision to impose tariffs on Chinese products over the Asian superpower’s “unfair” trade practices has brought in tens of billions of dollars, prompting Republican lawmakers to propose ways to pass along the windfall to American taxpayers.

U.S. Customs and Border Protection says special levies on China, known as Section 301 duties, have brought in more than $30 billion since they were imposed in July 2018 to combat Beijing’s “harmful industrial policies.”

Special levies on steel, aluminum, solar panels and washing machines have reaped roughly $10 billion more from countries, including China, since early 2018, according to CBP data.

Mr. Trump frequently points to those numbers to boast that his pressure tactics are paying dividends while White House and Chinese negotiators reach for an elusive trade deal.

“We’re taking in billions and billions of dollars in tariffs. We’re taking in tremendous numbers in tariffs,” Mr. Trump said during a press conference last week at the United Nations in New York.

Analysts say the sheer amount of revenue isn’t unprecedented but is an unusual turn of events in the post-World War II era.

“We used to get most of our revenue from tariffs. But it’s very unusual because for the last 80 years tariffs have been a declining source of revenue, so this is the first time [in recent history] it’s been a rising source of revenue,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget.

Tariffs are taxes on imports, largely designed to promote domestic producers by making outside goods less attractive.

Mr. Trump said China is “eating” the cost of his levies, but it’s complicated. Some Chinese companies may be forced to offer discounts to U.S. importers, though American-based businesses often pay the cost of the tariffs and pass it along to consumers in the form of higher prices.

The price is set to rise this fall when Mr. Trump imposes a 10% tariff on $300 billion worth of additional Chinese goods. It took partial effect on Sept. 1 but won’t be fully implemented by mid-December to avoid ripples during the Christmas shopping season.

Analysts at JPMorgan Chase estimated that the average American family could face up to $1,000 more in annual costs once the levies are in place because the tariffs are starting to hit popular consumer goods.

China, meanwhile, has retaliated with trade moves and tariffs of its own, hurting farmers in particular. While Mr. Trump is using some of the incoming duties to bail out the agricultural sector, some Senate Republicans say all Americans should get relief.

Sen. Rick Scott, Florida Republican, has been meeting with the White House on a proposal that would pass along tariff revenue in the form of tax cuts.

“Sen. Scott supports the president’s efforts to get tough on China, but any revenue brought into the federal government should be returned to the taxpayers,” Scott spokeswoman Sarah Schwirian said.

Sen. Tom Cotton, Arkansas Republican, filed legislation last week that would gather tariff revenue and give it to working-class taxpayers in the form of a rebate check that arrives several months after tax-filing season.

“Tariffs are an effective way to apply pressure to China and other nations in trade negotiations, but there’s no reason that tariff revenue can’t help working Americans in the process,” Mr. Cotton said.

U.S. adults who are citizens or legal residents, file federal taxes and earn less than $84,200 as individual filers or $168,400 as joint filers would be eligible for rebate checks. The plan starts with a special rebate check for calendar years 2017 and 2018 — mailed within 90 days of enactment — and would establish a recurring annual rebate for eligible filers as long as money is pouring in from what are known as Section 201, 232 and 301 duties.

According to Mr. Cotton’s office, the rebates would be a good way to shore up political support for the U.S. crackdown on China while protecting Americans against any price increases resulting from tariffs.

The White House hasn’t weighed in yet — the bill was just released — though Mr. Trump’s chief economic adviser, Larry Kudlow, has voiced support for Mr. Scott’s push to offer tax cuts equal to the amount the U.S. collects in tariffs.

Mr. Scott’s spokeswoman said the senator plans to put forward a formal proposal in the coming weeks.

Mr. Goldwein said the perceived merit of the proposals will depend on one’s view of the tariffs. Those who think tariffs are good policy, by preventing trade that is harmful to American interests, then it makes sense to help consumers bear some of the costs with rebates. Those who think tariffs are unwise and hinder economic growth, “in that case, you’re sort of just masking the effect of a bad policy,” Mr. Goldwein said.

The National Taxpayers Union said it would be better to scrap the levies instead of shifting around money.

“Instead of imposing tariffs on Americans and running the money through D.C. and then trying to rebate it to taxpayers, it would be much simpler and fairer to just not impose the tariffs in the first place,” said Bryan Riley, director of the National Taxpayers Union’s Free Trade Initiative.

As Congress plots its next steps, Chinese Vice Premier Liu He is set to return to Washington with his trade delegation Oct. 10 to resume talks with the Trump administration.

Beyond the 10% tariff being rolled out in stages, levies on $250 billion worth of Chinese goods are scheduled to rise from 25% to 30% on Oct. 15.

They were supposed to start Oct. 1, though Mr. Trump delayed them for two weeks as a goodwill gesture as China celebrates the 70th birthday of the start of Communist Party rule.

Mr. Trump toasted China’s anniversary in a tweet Tuesday, cultivating his relationship with President Xi Jinping even as members of his party chastised Beijing for its stifling rule and crackdown on pro-democracy demonstrators in Hong Kong.

“Congratulations to President Xi and the Chinese people on the 70th Anniversary of the People’s Republic of China!” Mr. Trump tweeted.

The president often goes out of his way to compliment Mr. Xi as a strong leader who drives a hard bargain, even as he slams China’s economic practices in the same breath.

Mr. Cotton and other Republicans said there was nothing to cheer Tuesday. He noted brutal social campaigns over the past decades and the detainment of Uighurs in western China.

• Tom Howell Jr. can be reached at thowell@washingtontimes.com.

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