
The US Trade Representative released a new round of proposed tariffs on Chinese goods, listing 200 pages of items with a value of US$200 billion. They target baseball gloves, handbags and digital cameras, among other goods. The move is in response to what the Trump administration says is China’s unfair trade practices, and comes after both nations already announced tariffs on US$50 billion of each other’s products.
President Donald Trump’s declaration that “trade wars are easy to win” will now be put to the test. Regardless of the outcome, US shoppers are poised to be losers, despite assurances from the administration that the new tariffs take into account the potential impact on consumers. Much of what the US imports from China is apparel, handbags, shoes and electronics — products that were largely spared in earlier tariff lists.
“The president has broken his promise to bring ‘maximum pain on China, minimum pain on consumers,’ and American families are the ones being punished,” Hun Quach, vice president of international trade for the Retail Industry Leaders Association, said in a statement following news of the new round of duties. “Consumers, businesses and the American jobs dependent on trade are left in the crosshairs of an escalating global trade war.”
Consumer-goods companies have been bracing for months as the Trump administration steadily ramped up its rhetoric on trade with China and other major trade partners. The latest announcement shows that fears of a full-blown trade war appear to be coming to fruition.
Up until now, only a few companies, including Harley-Davidson Inc. and Brown-Forman Corp., have publicly said the tariffs will affect their businesses, as most US retailers and consumer brands were spared in the first round of tariffs on Chinese imports. But the new list of products subject to duties has been expanded to target categories such as sporting goods, mattresses, some apparel items and furniture.
Some companies had successfully lobbied to get their products excluded from an earlier list of US tariffs. Now, some of these efforts may be for naught as the wider net of tariffs will capture more products from Chinese factories. Chains like Walmart Inc. and brands such as Nike Inc. and Mattel Inc. rely on Chinese suppliers for a substantial amount of goods, even though they’ve been moving some production because labour rates have been rising there.
‘Trump Tax’
To argue their case against tariffs, consumer companies’ playbook has included pointing to higher costs for everyday goods, while laying the blame at the president’s feet — the American Apparel and Footwear Association has dubbed the tariffs the “Trump tax.” Industry groups have also highlighted the duties’ potential to derail U.S. economic growth.
The new duties are “a reckless strategy that will boomerang back to harm U.S. families and workers,” said David French, the National Retail Federation’s senior vice president for government relations. “Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise.”
The tariffs could take effect after public consultations end on Aug. 30, according to a statement from the US Trade Representative’s office Tuesday.
The downside to the economy is stark, said UBS Securities economist Robert Martin.
“We expect this will have a meaningful impact on US consumer inflation as well as a meaningful drag on US GDP growth,” he said in an interview, citing the Chinese government’s pledge to retaliate against new US duties. “China is by far the largest provider of consumer products to the US”