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US consumers may bear brunt of Trump’s tariffs
WASHINGTON, Sept 19, 2018 (BSS/AFP) – A universe of Chinese-made goods
found in every American home is now subject to the sprawling tariffs imposed
by President Donald Trump, with the brunt of costs to be borne by US
consumers, key drivers of the American economy.
Shampoo and furniture. Vacuum cleaners, handbags and mobile phones. Half
of everything Americans buy from China will by Monday be subject to 10
percent levies, rising to 25 percent about three months later.
“Every time this trade war escalates, the risk to US consumers grows,”
Matthew Shay, president of the National Retail Federation, said in a
statement following the announcement of Trump’s latest China tariffs.
“We cannot afford further escalation, especially with the holiday shopping
season right around the corner.”
Trump’s new protectionist measures now cover some 11,400 Chinese-made
goods, or about $250 billion in annual imports at current levels, according
to official documents and trade data.
According to Chad Bown, a trade expert at the Peterson Institute for
International Economics, by the time of November’s mid-term elections, “40
percent of total US imports could be hit by new tariffs that Trump imposed in
2018 alone.”
While the Trump administration may downplay the risks, economists have
long warned that mounting tariffs will ultimately have to come out of
individual Americans’ pocket books.
Trade is among US households’ biggest worries, according to a regular
University of Michigan survey of consumer sentiment.
The breadth of products concerned, produced by most industrial sectors,
and their number, could cause see some consumers cut their spending.
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– Tariffs for Black Friday –
But household spending, an historic driver of the American economy, has
risen for a generation on the back of cheap, Chinese-made goods that US
consumers buy casually, dispose of and replace.
In American shops and major retail outlets like Walmart, shoes, clothing
and electronics made in China are unavoidable.
American consumers can be particularly price-sensitive, moderating
nationalist sentiment if it means spending more.
Opinion polls showed last year that a large majority preferred to buy
American goods if foreign-made equivalents were priced the same. But their
numbers dwindled as US-made goods became more expensive.
Economists expect a bump in prices for Chinese-made merchandise will see
sales plummet.
The tariffs will affect a tiny fraction of US gross domestic product, well
below one percent, but the economic costs “are likely to be
disproportionately felt by US households,” according to Barclays.
Tariffs have already driven up prices for durable goods, with costs
estimated at 0.6 percent of GDP, the bank’s analysts said.
A recent National Retail Federation study showed that border taxes on
Chinese-made goods could cost American consumers as much as $6 billion a
year.
But consumers may have little alternative, as similar goods made elsewhere
are even more costly, the federation said.
On November 23, the day after the Thanksgiving holiday that retailers dub
“Black Friday,” American consumerism is due to kick into high gear, marking
the unofficial start of the Christmas shopping season.
“The mere talk of tariffs on all remaining Chinese imports is of serious
concern to retailers since tariffs of that magnitude would touch on every
aspect of American life,” Shay said.
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