AILSA CHANG, HOST:
Talks between the U.S. and China have ended without any agreement on trade. President Trump said in a tweet this afternoon that negotiations were candid and constructive. He also said the talks will continue into the future, but he didn't say when. Meanwhile, the Trump administration has made good on its threat to raise tariffs on another $200 billion worth of Chinese imports. The U.S. says it's taking this step because China reneged on commitments it had made in earlier negotiations. To explain what impact all these tariffs will have, we turn now to NPR's Jim Zarroli. Hey, Jim.
JIM ZARROLI, BYLINE: Hi, Ailsa.
CHANG: So just remind us. What kinds of products are affected by these tariffs?
ZARROLI: Well, this applies to about $200 billion in imported products from China. Now, only about a quarter of those are consumer goods. They do not include things like toys and footwear that were exempted by the Trump administration. They do include things like bicycles and pet food, certain kinds of building supplies. These products can still come into the United States from China just like they always have, but they will face a tariff or a tax of 25 percent instead of the 10 percent they pay now. And this will have to be paid by the company that imports them at the port where they're brought in.
CHANG: Right. Importers now have to pay this big tariff. But how exactly will they pay it?
ZARROLI: Well, any one of three things can happen. First the importers can call their manufacturer in China and try to persuade them to give them a price cut.
CHANG: (Laughter).
ZARROLI: The - right? The manufacturers in China of course don't want to lose business.
CHANG: Sure.
ZARROLI: So maybe they'll agree to that, maybe not. The second thing is they can - that can happen is that the importers just agree to absorb the tariffs themselves, which means of course they make less money, which they are obviously reluctant to do.
CHANG: Right.
ZARROLI: The only other option they have, though, is to pass the increase on to their customers. In other words, prices will go up. So it might be one of these, or it could be some combination of the three. We don't really know. But I did speak to Jennifer Hillman, who is a professor at Georgetown Law Center. And she says President Trump imposed an earlier round of broader tariffs last year, and she says economists have studied the impact of those tariffs.
JENNIFER HILLMAN: Almost all of it - close to 100 percent of it - has been paid by U.S. importers and then passed along in various degrees to U.S. customers.
ZARROLI: So President Trump argues that these tariffs are good for the economy. They bring in money to the U.S. Treasury. But Hillman says, you know, these are ultimately passed on to consumers. So what Trump says may be true, but make no mistake. Importers are going to try to pass them on to you and me.
CHANG: Yeah, and when can you and I expect prices to start rising?
ZARROLI: Well, there are two points here. First, these tariffs - they only apply to products that were shipped from China after last night. If something was shipped before that and it's still, you know, out there on a freighter heading toward an American port right now, it won't have to pay this higher tariff. And it typically takes two to three weeks for cargo ships from China to get to the United States, so we have kind of a grace period, a little wiggle room.
CHANG: OK.
ZARROLI: The other point is about half the Chinese imports that are facing these tariffs are intermediate goods that go into making other products. These are shipped to the United States and used in the manufacture of other products, something like auto parts or electrical components, you know, buttons for coats and shirts. The manufacturing process takes a while, so it will take time for the items to show up in stores, and it will take time for customers to see price increases.
CHANG: All right, that's NPR's Jim Zarroli. Thanks, Jim.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.
