Lutnick: Beijing ‘Eating’ Majority of China’s 52 Percent Average Tariffs

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U.S. Commerce Secretary Howard Lutnick said that foreign governments have been bearing the brunt of U.S. tariffs over 15 percent, with China paying the lion’s share.

Lutnick said that most countries aren’t facing tariffs above 15 percent and that when they do, the foreign governments step in to keep their businesses afloat while they negotiate better terms.

“The model is clear: 10 percent tariffs or less are paid by the manufacturers, the distributors, the businesses,” he said. “The consumer doesn’t pay. The consumer doesn’t pay because the seller doesn’t want to raise prices, because if they could, they would, but they don’t want to sell less. So they eat it.”

If the duties are between 10 and 15 percent, the distributor and manufacturers share the cost at about a 60-40 split, he said, resulting in about a 2 percent price increase with tariffs of 15 percent.

“And above 15, no one can handle that ... unless the government covers it. So what you saw in cars, when you had 25 percent, before Europe made their deal and Japan made their deal, the government of South Korea and Japan and Europe covered it, because they didn’t want to hurt their employment,” Lutnick said.

“You’ve got to remember, these are big things, and our president is playing the big hand for America, and some of the governments play the little hand for their countries’ good,” Lutnick said, adding that this is why citizens have not seen price increases as a result of the tariffs.

He added that an India deal is also possible if the country agrees to stop buying Russian oil.

Earlier this month, President Donald Trump criticized India on Truth Social when Indian Prime Minister Narendra Modi appeared alongside the leaders of communist China and Russia for a summit and Indian officials defended their country’s purchase of sanctioned Russian oil at low prices. A week later, Modi and Trump announced upcoming meetings on social media and optimism about renewing economic ties.

Lutnick said Japan and the European Union have been good trading partners, and that the United States and South Korea have agreed on a deal, but that it’s not yet finalized.

“Let’s see if they come through with the paperwork,” he said. “It’s one thing to shake the president’s hand, it’s another when the pen has to meet the paper.”

He said Trump’s tariff strategy has changed the way other countries meet the United States at the table, pointing to the Japan and EU deals as an example. While Europe has agreed to U.S. car imports with no tariffs, Japan culturally has no market for U.S. cars, Lutnick said. Japan has instead agreed to invest $550 billion in American projects of Trump’s choice during his term in office, effectively to “buy down their tariff” at no cost to its own taxpayers, he said.

“Tariffs are bringing in $40 billion a month, bringing down our deficit,” Lutnick said. “It’s going to grow to $700 billion a year, and with growth of our economy the president says it’s going to get to a trillion.”

He predicted a construction boom in the first quarter of next year, with new factory building worth roughly $10 trillion and gross domestic product growth even before the factories open.

“You’re going to see factories get built in America at a scale you have never seen before,” he said.

A federal appeals court has ruled Trump’s application of tariffs illegal, but Lutnick said the administration is “supremely confident” the ruling will be overturned on appeal. He pointed to the four dissents, where he said the justices agreed that foreign policy, “the ability to deal with foreign relations,” has to be put “in the hands of the president.”

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