Rep. Axne Grills Mnuchin on the Consumer Cost of Tariffs
WASHINGTON – Today, U.S. Rep. Cindy Axne (IA-03), questioned U.S. Secretary of the Department of Treasury, Steven Mnuchin about the impact the Administration’s tariffs on China are having on everyday Iowa families at a House Financial Services Committee hearing. A link to download broadcast quality video of the exchange is available here. A transcript of the exchange is available below.
During the exchange, Rep. Axne asked if Sec. Mnuchin agreed that American consumers will pay the price for the Administration’s tariffs. Sec. Mnuchin responded by stating, “I do not necessarily agree with that.”
However, leading economists have estimated that the tariffs will drive-up prices, costing the average American family more than $500 a year. If the Administration follows through on increasing tariffs on the other $300 billion of imports, this could cost American families $2,000 per year. Additionally, last week, major retailers, including Walmart, announced they would raise prices in order to cover the cost of the tax on imports.
A full transcript of the exchange is available below:
AXNE: I would like to talk to you a little bit about tariffs and trade. I am from Iowa, we are being hit hard, first I appreciate the removal of the section 232 tariff on steel and aluminum, however those were put on by your administration, but thank you so much for removing those. I want to talk to you about tariffs that were just placed on Chinese goods this month, and the tariff is on almost $200 billion of imports, just increase from 10% to 25%. do you agree with president trump that china is footing the bill for these tariffs?
MNUCHIN: I agree that china is footing most of the bill for it, yes.
AXNE: So, who is paying the price for it these?
MNUCHIN: Well, again, when you look at the tariffs, there’s probably three or four different things are going on. One is a change in the currency, which leads to lower prices for us. Two its margins that are being absorbed by companies in China. and three, there may be, in certain cases an impact passed on to the consumer, we’re closely monitoring that and that will be part of the exception.
AXNE: I appreciate you bringing up the last piece because major retailers like Walmart have said they will raise prices as a result of your administration’s tariffs. You understand how a tariff operates, can you tell us about that?
MNUCHIN: I’m not sure if you were here when I mentioned earlier that I just spoke to Walmart’s CFO and we speak regularly, I am monitoring with them very carefully.
AXNE: So, are tariffs a tax on imports?
MNUCHIN: Tariffs are a tariff on imports, they are not a tax.
AXNE: Tariffs are a tax on imports and they are paid for by US companies that import goods. So, do our companies like Nike, Adidas, and Walmart have said that they are going to pass on these prices to consumers. would you not consider that an increase on costs on folks like mine in Iowa and Americans across the country?
MNUCHIN: Well, what I mentioned earlier and the reason why I spoke to Walmart, is because obviously they have a lot of consumer issues. the way the tariffs are designed, was the last tranche was a consumer issue. we are monitoring carefully- there will be some exceptions. My expectation is a lot of business will be moved from china to other places in the region, so that there will not be a cost.
AXNE: Reclaiming my time- I’m not getting a straight answer here. Do you agree that American consumers will be paying more as a result of these tariffs?
MNUCHIN: I do not necessarily agree with that, and that’s something we are monitoring very carefully, we will be issuing exemptions.
AXNE: So, you disagree with all of our key retailers in the country, and experts who understand that a tariff is most likely passed on to consumers, because that’s historically what happens. Do you disagree with that as the Secretary of the Treasury?
MNUCHIN: I just spoke to many of these CEOs.
AXNE: Do you disagree with that- that the tariffs won’t be passed on with consumers in any way, shape or form?
MNUCHIN: Again, there may be a small number of items where the tariff may be passed on, those are the things we will specifically –
AXNE: So, you agree that American consumers will be paying more because of the tariffs?
MNUCHIN: We made no decisions on that, the last tranche is subject to presidential approval, and its subject to exemptions.
AXNE: It’s the importers that make the decisions on that, isn’t that correct? It’s their products that they’re importing?
MNUCHIN: Excuse me?
AXNE: If the decision is being made, by the folks in our country who make the products, not necessarily you, it is on the companies that import products, not you deciding what price they put out on a product.
MNUCHIN: Well, again, if we issue an exception, then there will be no price increase. And again, most of those companies are moving products.
AXNE: So, reclaiming my time moving on, can you tell me what the average Iowan makes in a year?
MNUCHIN: I cannot tell you exactly. I would guess its…
AXNE: Can you tell me what the average American family makes in a year?
MNUCHIN: Yes, it’s between, depending on whether you use the mean or the median, $45-65,000.
AXNE: Yes, median is 60,000, closer to 79,000, for the mean. Can you tell me what cost these tariffs will put on American families?
MNUCHIN: I do not expect significant costs on American families and that’s something we’re absolutely focused on.
AXNE: Have you done research on this?
MNUCHIN: As I said, I have just spoken to all of the major companies that provide consumer goods.
AXNE: If you have done research on this, how come we have not seen this research? I have not seen it, I don’t think my colleagues have not seen it, how come it hasn’t been passed on to us to ensure the constituents in our district aren’t paying the cost for this?
MNUCHIN: To just comment, the last tranche is under investigation. The president has not made the decision, and the consumer products by design in the last tranche.
AXNE: So, will you commit to providing us this research then?
MNUCHIN: Again, at the appropriate time we will brief congress on what the economic impact is of it, yes.