Trump’s Trade War Targets US$200 Billion of Consumer Goods

With Trump’s latest proposal looking to place tariffs on an estimated US$200 billion worth of Chinese exports, local American retailers and consumers could soon face price increases on any stock arriving on American soil from China.

Trump’s earlier Tariffs have mostly been directed at industrial materials, like factory machinery. Now, he’s looking to up the ante in his war against China, proposing new fees for consumer goods coming from Chinese suppliers.

The list, which was released by the Office of the US Trade Representative earlier in the week, includes a 10 percent duty on a number of consumer products, including groceries, perfumes, cleaning products and TVs.

According to the Office of the US Trade Representative, steps have been taken to ease the impact of the proposed tariffs on affected US parties, through the “removal of subheadings identified by analysts as likely to cause disruptions to the US economy”.

However, Business Insider has reported that the chief US economist at Nomura, Lewis Alexander, believes the sheer scope of the new tariffs will greatly impact American households, and retailers relying on Chinese imports.

In a note to clients, Alexander said that “if these tariffs do indeed take effect, there would likely be a larger impact on consumers than the initial round”.

The new list of items included in Trump’s latest round of tariffs is reportedly split between capital and consumer goods, which economists are predicting will result in inflation and price increases.

In fact, the Chief Economist at Pantheon Macroeconomics, Ian Shepherdson, claims the consumer goods that are subject to the new 10 percent tariff make up “almost six percent of the core [consumer price index] CPI”. According to his estimations, the index would increase by roughly 0.6 percent, or 30 percent of the Federal Reserve’s target of two percent – which would not be good for inflation.

The market has already seen the negative ramifications of Trump’s tariffs after he instigated a 20 percent levy on washing machines and laundry equipment products earlier in the year. In February, the cost of these goods in America reportedly rose by 1.8 percent in the early months, and by June, the cost of laundry products in the US had risen by as much as 19.9 percent.

While the proposed tariff on consumer goods is only half of the 20 percent fee on laundry equipment, consumers are still expected to suffer the brunt of the new tariffs, as the cost of accessing everyday products skyrockets.

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