One of the top trade officials in the White House argued on Sunday that China is bearing the burden of U.S. tariffs on Chinese goods, not American consumers, and explained why President Trump decided last week to delay the imposition of new tariffs.
"We've had tariffs on for over a year," Peter Navarro, the director of the Office of Trade and Manufacturing Policy, said on "Face the Nation" Sunday. "The Chinese have borne the entire burden of that by slashing their prices and reducing the value of their currency by 12%."
But last past week saw the stock market careening, fueled by fears of the trade war with China and a potential U.S. recession. President Trump acknowledged the pain consumers might feel from a new round of tariffs he had threatened to impose and, at least on tariffs related to consumer products.
"We're doing this for Christmas season just in case some of the tariffs would have an impact on U.S. customers, which so far they've had virtually none," the president said Tuesday.
Earlier this month, the president had threatened to impose a 10% tariff on $300 billion on Chinese tariffs, slated to go into effect September 1. The items taken off thefor now include cell phones, laptops, video game consoles, computer monitors, holiday lights and some types of toys, shoes and clothing.
Navarro explained why the White House had changed course, telling "Face the Nation" that members of the business community had met in the Oval Office with Trump officials and made the "very persuasive argument" that although retail shelves would be stocked for Christmas, the contracts had been executed in "dollar contracts, which means they weren't able to shift the burden back to the Chinese."
He said business leaders "also told the president quite clearly that they were also moving their production sourcing and supply chain out of China as fast as possible."
Asked how the administration could promise Americans won't feel the impact of tariffs while retailers are convincing the president they would, Navarro responded, "We've had tariffs on for over a year, $250 billion worth, and we haven't seen a thing in terms of inflation."
Moderator Margaret Brennan pointed out that economic indicators are backward-looking, compared to the market, which is forward-looking. Navarro said that, going forward, "what we're seeing is the fleeing of the supply chain." He said retailers are "finding other sources of supply," and investment is coming "back here in America." Noting that U.S. consumers spend $14 trillion annually, he pointed out that "if we have 10% tariffs on $300 billion worth of goods, that's $30 billion ... One-fifth of 1% on the consumer price index ... It's nothing."
Navarro said that half the tariffs will still be imposed September 1. "The tariffs are working. They're important part of the strategy to bring the Chinese to the negotiating table," he said. "And I think, Margaret, it's important whenever we talk about the tariffs we talk about what we're fighting for."
What the administration is "fighting for," Navarro said, includes measures to curb China's intellectual property theft and unfair market practices. He cited the country's efforts to steal U.S. trade secrets through hacking and technology transfers that are forced on U.S. companies as a condition of market access.