Who Is Paying for Trump's Trade war with China?

Since September 24, 2018 the US has been imposing tariffs on Chinese products worth approximately USD 250 billion, or 50% of imports from China. In the debate, it is often assumed that these tariffs will harm the American economy. This is not true because about three quarters of the burden can be passed on to Chinese producers. Since the US authorities are paying customs duties on precisely those products for which import elasticity is high, consumer prices will rise by an average of around 4.5% for all affected products in the US, while Chinese suppliers will lower their export prices by an average of 20.5%. As consumer prices rise only moderately, tariffs will lead to a reduction in imports of just 37%; meaning that the bilateral trade deficit between the US and China will only be about 17% lower. The US generates customs revenues of USD 22.5 billion, but domestic residents do not even account for a quarter of this sum. Although customs duties distort US consumer choices, the passing on of duties gives the USA as a whole a net advantage of USD 18.4 billion.