Tariffs Targeting Intermediate Goods Go into Effect

At 12:01 a.m. Friday, July 6, the Trump administration began imposing Section 301 tariffs of 25 percent on $34 billion worth of imports of Chinese goods, and they plan to soon levy tariffs on another $16 billion. These tariffs target intermediate and capital goods imported by U.S. businesses, or in other words, goods that U.S. businesses use to manufacture other goods. The administration targeted industrial goods to limit the impact on consumers, but this is a misguided notion; it ignores that the party responsible for sending a tax to the government is often not the same party who bears the actual burden of a tax. According to an analysis by the Peterson Institute for International Economics, of the goods that are subject to the Section 301 tariffs, 52 percent are intermediate goods and 43 percent are capital goods. Further analysis shows that many of these targeted products are imports coming from American– and non-Chinese-based multinational firms. In other words, U.S.…

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