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Who pays Trump's tariffs, China or U.S. customers and companies?
U.S. President Donald Trump says China pays the tariffs he has imposed on $250 billion of Chinese exports to the United States.

But that is not how tariffs work. China's government and companies in China do not pay tariffs directly. Tariffs are a tax on imports. They are paid by U.S.-registered firms to U.S. customs for the goods they import into the United States.

Importers often pass the costs of tariffs on to customers - manufacturers and consumers in the United States - by raising their prices.

U.S. business executives and economists say U.S. consumers foot much of the bill through rising prices.

White House economic adviser Larry Kudlow has acknowledged that "both sides will suffer on this," contradicting the president.

The tariff bill is set to rise further. Trump this month directed U.S. Trade Representative Robert Lighthizer to launch the process of imposing tariffs on the remaining $300 billion of goods from China. That includes products ranging from cellphones to baby pacifiers.

That would mean almost all imports from China would be subject to a 25 percent import tax.

REUTERS/Andrew Kelly