When US puts a tariff on a Chinese import, it does not send a bill to China

President Trump frequently promotes the idea that when the United States places a tariff on an import from another country, that other country directly pays the bill.

He’s wrong, but he keeps saying it.

“Billions of dollars will soon be pouring into our Treasury from taxes that China is paying for us,” Mr. Trump said during a news conference earlier this month. On Thursday, he wrote something similar on Twitter.

That tweet raises a question. Are the tariffs being charged to China, or to companies? It’s a good starting point for a sort of F.A.Q. on tariffs that could be useful for executives, voters, even presidents.

So who gets “charged” for tariffs? A foreign government? An American company that manufacturers goods overseas, then sells those goods in the United States?

A. Neither of them, technically speaking. When the United States puts a tariff on a Chinese import, it does not send a bill to China. If an American company manufactures a good elsewhere and it is subjected to a tariff, the company doesn’t typically get a bill from the government, either.

Then who pays?

Usually a middleman, to start. Most American companies that bring products in from abroad do not handle the paperwork themselves. They hire what’s known as an importer of record — someone whose job it is to navigate the intricacies of the United States Customs and Border Protection’s system for inspecting imports and levying any duties on them. (Duties are a tax or fee placed on an import. Tariffs are a form of duty.)

When an imported good enters a port in the United States, the importer of record initially gets the bill for the tariff.

So tariffs are a tax on middlemen?

Not usually. This is where the question of who pays tariffs gets trickier — because middlemen tend to pass on their costs.

A company that contracts with an importer will almost always see the costs of that contract rise after a tariff has been imposed on goods it imports. So now the company is paying, say, 10 or 25 percent more to bring in the exact same product it imported before the tariffs. The company faces a choice: What should it do about those extra costs?

So tariff costs get passed to an American company. What are its options?

The company could pass on the added costs to consumers, in the form of higher prices. That’s the simplest route, particularly in a competitive market where the supply chain is not easily moved. (Washing machines are a good example of this. Their prices rose in the United States earlier this year after Mr. Trump’s administration imposed tariffs on them.)

Companies can also try to minimize tariffs by switching suppliers or changing the products they sell. In the case of China tariffs, that could mean moving a factory from Beijing to Vietnam. In this case, no one pays the tariffs; the company is making an end-run around them. Alternatively, an American company could negotiate concessions from a Chinese supplier, likely by threatening to shift production. In that case, the Chinese supplier’s profits would fall, and it would bear at least some of the cost of the tariffs. Some research suggests American companies have had success essentially passing the bill back to China.

Some companies may choose to absorb the extra costs themselves, by accepting lower profits. They choose neither to raise prices nor immediately pay to shift production, based on the idea that the most economically efficient price to charge for the product is not changed by the existence of tariffs. That could be the case with Apple: It can charge such a premium for iPhones that it might decide to accept smaller profit margins on them for a while, if they become subject to tariffs.

How does China end up paying?

It never does, directly. But there are certainly ways that American tariffs hurt China. If companies move production to Vietnam, China would see less economic growth — though that itself is not a direct benefit for American production, and in the short term would be a headache for companies that have to find new factories.

Chinese companies forced to cut costs could have their profits pinched and could reduce hiring or close entirely. That could put pressure on them to move to places like Vietnam.

Another way China could lose: Americans may buy fewer Chinese goods as the prices rise. That’s a loss for China, but it’s also a tax on Americans who buy things.

The United States government is not “charging” China or the American people. But, in many ways, Americans are paying the costs anyway.

But someone is paying tariffs, right? Where does that money go?

To the United States government. Mr. Trump appears correct that his tariff increases are bringing “billions” of dollars into federal coffers: Revenue from tariffs exceeded $5.5 billion in October, according to the Treasury Department, up from $3.2 billion in October 2017. That’s a 40 percent gain. But even over the course of a year, it isn’t nearly enough to counter the sharp increases in the federal budget deficit that Mr. Trump has overseen.