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WASHINGTON (AP) – Expect President Donald Trump's recent reliance on Chinese import tariffs for many US consumers. He did not intend to reduce import taxes that were to start on Sunday.
"They are on. They left, "the president told reporters Friday before leaving for a weekend at Camp David.
Americans have been largely spared from rising prices in their previous rounds of trade penalties. Not anymore. The 15% tariff on Chinese imports of $ 112 billion will apply to items ranging from smart watches to televisions to shoes, diapers, sporting goods, meat and dairy products.
For the first time since the beginning of the trade war, Trump has seen its prices rise. Many US companies said they would be forced to pass on the higher prices they had to pay on imports from China.
Despite the impending suffering of the Americans, Trump tried to present the tariffs as placing the United States "in an incredible bargaining position" with Beijing. "It will only get worse for China."
For more than a year, the world's two largest economies have struggled with a tough duel, marked by escalating Trump penalties on Chinese products and Beijing retaliatory tariffs.
Both parties have had periodic interviews that seem to have made little progress despite the glimmers of potential breakthroughs. All the while, they imposed tariffs on billions of products of each, which is a disagreement on what analysts consider Beijing's predatory tactic in its desire to become the supreme superpower in high technology. .
"We will win the fight," said Trump.
Until then, American consumers had been spared the worst: the Trump administration had left most of the common household items out of its customs tariff (valued at $ 250 billion in Chinese products) and instead targeted industrial products.
According to the new customs tariff, 69% of consumer goods purchased by Americans in China were subject to import taxes, compared to 29% currently.
Higher tariffs were also due to come into effect on December 15 for another batch of Chinese products – worth $ 160 billion. By that time, about 99% of consumer goods manufactured in China imported into the United States will be taxed according to calculations. by Chad Bown of the Peterson Institute of International Economics.
Overall, Trump's trade war lifted the average tariff on Chinese imports from 3.1 percent in 2017, before the start of hostilities, to 24.3 percent.
"The bottom line is that, for the first time, Trump's trade war will directly raise prices for many household budget items such as clothing, shoes, toys and consumer electronics," writes Bown in a report.
Trump said trade wars are "easy to win". But for months, he falsely claimed that China itself was paying customs duties and leaving the Americans unscathed. In fact, US importers pay customs duties. They must make a very risky decision: to absorb the higher costs themselves and accept lower profits or pass on their higher costs to their customers and risk losing customers.
It has become an increasingly difficult decision.
After years of extremely low inflation, consumers have become more resistant to rising prices, especially when they can easily compare online prices for household products and choose the cheapest options. For this reason, many retailers may choose not to charge their customers the cost of the highest rates.
The higher costs faced by US importers could be somewhat offset by the depreciation of the Chinese currency, which makes Chinese products a little cheaper in the United States.
Still, the prices of some goods will cost more to Americans. Trump tacitly acknowledged this a few weeks ago by announcing a postponement of its higher tariffs on imports of $ 160 billion until December 15 – to prevent them from squeezing buyers on vacation.
Even before December's tariffs, 52% of shoes and 87% of textiles and clothing imported from China were to be hit by Trump's tariffs, according to Peterson's Bown. And without even counting the increase (from 10% to 15%) that Trump had announced for its new rates a week ago, JP Morgan had estimated that its import taxes would cost around $ 1,000 per year. year to the average household.
"The story that the vacation property was (were) granted a stay is false news," said Stephen Lamar of the American Apparel and Footwear Association. Overall, 15% tariffs in September and December will force Americans to pay an additional $ 4 billion a year for shoes and boots, according to a shoe trade group.
Retailers, engaged in a battle for survival with Amazon and other e-commerce competitors, have prepared for the worst.
Macy's rang the alarm when she announced earnings in August. In May, Trump had increased from 10% to 25% the separate tariffs of $ 250 billion on Chinese products. In response, Macy's attempted to raise prices for certain items on the hit list, such as luggage, household items and furniture. But according to CEO Jeff Gennette, customers simply said no.
Some retailers were trying to force their suppliers to bear the higher costs so they would not have to raise prices for buyers. Target confirmed to the Associated Press that it had warned its suppliers that it would not agree to increased costs arising from Chinese tariffs. Some small retailers were even more vulnerable.
"Any cost increase puts us in a difficult situation," said Jennifer Lee, whose family owns the Footprint shoe store in San Francisco. "It makes it more difficult for business owners because we will have to touch our margins, but it will also be difficult for us to pass them on to our customers."
Albert Chow, owner of Great Wall Hardware in San Francisco, said he had already raised prices for some Chinese-made products because a series of previous tariffs had led his suppliers to raise prices by 10 to 20 percent .
"I will try to keep prices low as long as I can," said Chow. "But at a certain point, when tariffs are too high, we must eventually raise prices, and then the price goes to the end user – the customer."
What is frustrating for retailers is that consumers might otherwise be in an exuberant mood this holiday season. For most Americans, their jobs are secure and their wages are rising. The unemployment rate is almost half a century lower.
Yet the economy itself seems more and more fragile. Growth is slowing as the global economy weakens. In addition, Trump's mercenary trade policy – imposing, delaying, reimposing import taxes via tweet – prevents companies from choosing their suppliers, plant sites and new markets. They are delaying investment, which weighs more heavily on the economy.
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Innocenzio reported from New York. AP video reporter Terry Chea has contributed from San Francisco.
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