U.S. consumers to be hurt by tariffs
President Donald Trump said Monday that China is paying the U.S. billions of dollars in tariffs as he ramps up his trade war with Beijing. But that’s inaccurate: American consumers and businesses are the ones who will be paying higher costs for imports after he slapped penalties on $200 billion in Chinese goods.
The duties, which go into effect Sept. 24, amount to a 10 percent tax on everything from Christmas lights to bicycles and are likely to be passed on to consumers ahead of the holiday shopping season.
Even though some popular goods such as smart watches and toddler playpens have been exempted, U.S. retailers are bracing for lower profits. Farmers and manufacturers are also expecting additional lost sales, contributing to mounting pushback against the president’s trade policies.
“Every time this trade war escalates, the risk to U.S. consumers grows,” National Retail Federation President and CEO Matthew Shay said following the tariff order Monday.
With orders already onboard ships headed to U.S. ports, retailers like Walmart and Target who source heavily from China will face the additional 10 percent tariff on many imported items starting next Monday. That tax will rise to 25 percent on Jan. 1, making it increasingly hard for stores to avoid passing the costs onto their customers.
The products include canned mandarin oranges, rawhide for pets, hair-care products, dog leashes and dog collars, luggage, handbags, wrapping paper, gas grills, makeup mirrors, vacuum cleaners, toothbrush replacement heads, razors, air conditioners, futons, patio furniture, wooden furniture and mattresses among others, according to a list released by the administration earlier this year.
As expected, Beijing on Tuesday met Trump’s move by announcing plans to slap duties on another $60 billion worth of U.S. exports. That in turn is expected to prompt Trump to target another $267 billion worth of Chinese goods, as he warned Monday night he would do.
Once the latest round of duties goes into force, the Trump administration will have levied tariffs on approximately $253 billion worth of Chinese exports, or roughly half of the $506 billion China shipped to the United States last year.
The Chinese government led by President Xi Jinping will have imposed duties on about $113 billion of imports from the United States, which totaled about $130 billion last year.
The escalating tensions prompted Craig Allen, president of the U.S.-China Business Council, to urge both sides return to the negotiating table, even though previous attempts to bridge differences have been unsuccessful.
“We believe the tariffs are a tax on the American people, they are a tax on the American economy,” Allen told reporters at a previously scheduled news conference to discuss the group’s most recent survey of its member companies. “They will be disruptive. They will create uncertainty in the market. They will have ripple effects, second, third, fourth order effects in the economy.”
But he also called on China to jump start its stalled reform process by more quickly following through on promises made six years ago at the 18th Communist Party Congress and by much more generously implementing its World Trade Organization commitments.
“Now is not the time for gradual reform. Now is the time for a sense of urgency, real negotiations and real market-oriented reform in China,” Allen said.
In one sign of how Trump’s presidency has changed the environment in China, U.S. companies doing business there listed U.S.-China trade tensions as their top concern in the USCBC’s annual survey in June, a sharp jump from eighth place in 2017.
Earlier this month, U.S. Treasury Secretary Steven Mnuchin invited Chinese Vice Premier Liu He to Washington for a new round of talks. Trump’s decision to proceed with more tariffs appears likely to nix that possibility. However, Treasury officials did not immediately reply to a request for comment.
While many in Congress and the business community agree that China’s industrial policies pose a major challenge for the United States, they disagree with his unilateral use of tariffs to try to force Beijing to make reforms to its “Made in China 2025” program aimed at dominating key sectors like artificial intelligence, robotics and driverless cars.
“The Trump Administration seems to have just one play in its playbook: slap tariffs to raise prices on an ever growing list of products used by American consumers and hope China blinks first,” Sen. Ron Wyden, the top Democrat on the Senate Finance Committee said in a statement. “I am increasingly concerned that the administration’s tactics have yet to produce any real change in behavior in China, and are only creating chaos for American businesses, workers, and consumers.”
Meanwhile, House Republicans stepped up their calls for Trump and Xi to meet face to face as soon as possible, although the only opportunity currently on the horizon is a G-20 leaders summit at the end of November in Argentina.
“Any time tariffs are imposed I worry that Americans will be forced to pay extra costs — in this case on nearly half of U.S. imports from China,” House Ways and Means Chairman Kevin Brady (R-Texas) said. “I continue to emphasize that the ultimate means to create an effective outcome is for President Trump and President Xi to engage constructively to develop a long-term and profound solution that levels the playing field for American manufacturers, farmers and workers.”
Trump himself referred to that possibility in his statement announcing the tariffs. “Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection,” he said.