Opinion Trumps dollar 16 billion farm bailout means youre paying for his tariff war twice Well say this for President Trump: When he misunderstands something, he misunderstands it more than anyone else in creation. Take the business of tariffs. Trump is unshakably convinced that his tariffs are a tax on China. He repeated this grossly erroneous claim just Thursday, during his announcement of a new dollar 16 billion bailout for farmers harmed by, yes, his tariff war. Just so you understand, he said, these tariffs are paid for largely by China. A lot of people like to say by us. Well, the people who say that are economists and other experts who have done the math, and found that the tariffs Trump has imposed on imports from China cost American consumers dollar 68.8 billion last year, though some of that spending got funneled back to some domestic producers in the form of higher prices which their customers, of course, paid . But our main topic here is that dollar 16 billion bailout, and what it says about who pays for Trumps trade war and how much. The newly announced bailout comes on top of dollar 12 billion in emergency farm aid he announced last year, aimed heavily at soybean farmers whose exports to China have fallen to zero, thanks to the trade war. As Jordan Weissmann observes in Slate, the dollar 28 billion total is about what the U.S. spent last school year on Pell grants for college students. That raises doubts about Trumps priorities. To get a sense of where these expenses fall, its worthwhile to follow the money. The dollar 68.8 billion tariff cost estimated by a team of economists led by Pablo D. Fajgelbaum of UCLA, is reflected in the prices of imports, which are passed through almost entirely to U.S. consumers. The money is paid by importers to the U.S. government, which can redistribute it to the direct victims of the trade war, such as farmers, if it wishes. But thats a narrow recompense. Related video: Trump pledges dollar 16B to farmers hurt by trade war provided by USA Today It doesnt help collateral victims, such as the buyers of foreign made washing machines, the median price of which rose to dollar 835 from dollar 749 after tariffs were imposed on the appliances at the behest of Whirlpool, a domestic manufacturer . It wont help the estimated 40,000 beer industry workers who have lost their jobs, in part because of tariffs on the aluminum used to make cans, according to industry reports. Nor will it help others who lose their jobs if the tariffs foment a general economic slowdown. Nor are the agricultural bailouts evenly distributed within the farm sector. Theyre heavily concentrated among Midwestern growers, including soybean farmers, leaving dairy farmers and others wanting. Its proper to note that the pain in this sector isnt a direct result of U.S. tariffs, which at least return some money to the Treasury: Its the result of retaliatory tariffs from China and other trading partners, which destroys foreign demand for U.S. production. No one pockets any gains from these tariffs; theyre simply a deadweight loss to international trade. As farmers are well aware, the bailouts wont compensate them for the longer term damage to their export prospects. Soybean farmers cant count their losses simply in terms of lower annual exports while the tariffs are in effect; theyre fearful, rightly, that when former customers such as the Chinese turn to other countries for their supplies, they may never come back. The noose is getting tightened a little bit more than it was before, Michigan farm spokesman Jim Byrum said a couple of weeks ago. So U.S. consumers are paying a tax to the U.S. government in the form of higher prices for imported goods. Some of those funds are circulated back into the economy as emergency aid — but its not going back to all the consumers who paid the tariffs. Nor is its certain that the tariff revenue is actually going to the trade war victims: The government is running a deficit, caused in considerable part by the tax cuts enacted in December 2017, which largely benefited corporations and the wealthy. Arguably, its their tax breaks, not the losses of soybean farmers, that are being subsidized by Trumps tariff revenue. Moreover, because the farm losses are due to foreign, not domestic, tariffs, no revenue at all is coming to the United States as a result. The bailouts are our expense, completely. Thats another way in which the tariffs are paid not by China, but by us, Mr. Trump. See how it works? Pulitzer Prize winning journalist Michael Hiltzik writes a daily blog appearing on latimes.com. His business column appears in print every Sunday, and occasionally on other days. As a member of the Los Angeles Times staff, he has been a financial and technology writer and a foreign correspondent. He is the author of six books, including Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age and The New Deal: A Modern History. Hiltzik and colleague Chuck Philips shared the 1999 Pulitzer Prize for articles exposing corruption in the entertainment industry. ©2019 Los Angeles Times