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A customer is viewing an Apple Inc. iPhone for sale at a Best Buy Co. store in San Antonio, Texas. Photographer: Callaghan O & # 39; Hare / Bloomberg
Retailers and others will soon have to raise prices as tariffs start to weigh in the ongoing trade war between Beijing and Washington. Unless companies can transfer part of their supply chain in China to other low-cost countries, many products entering the United States will simply cost more. If wages do not rise to compensate for this, higher costs for consumers eventually become a tax that ultimately cancels Republican tax cuts.
The United States is prepared to impose on China an import duty of $ 200 billion more. China can not respond in kind because its trade deficit with the United States is too big. They do not matter much.
Bank of America has warned that the latest series of tariffs would harm Apple products as the holidays approach the end of the year. The rates could force Apple to raise prices for some Made in China technologies such as Apple Watch, these ugly headphones, its HomePod headphones and Dr. Dre's Beats, which they acquired in 2014.
CNBC wrote about it on Monday morning. Quoting the report, CNBC's technology editor, Todd Haselton, said the BofA report argued that a 25% tariff "could be substantially destructive of demand" (among others). terms, less buyers). BofA estimates that about one-third of the $ 26 billion in revenue from these products comes from US consumers.
Trump would like Apple to build more of its products in the United States, but unless US workers are willing to make similar bets to China, then these prices will rise. It is there that the tariffs become worrying for the market. The rise in consumer prices leads to an increase in inflation. If wages do not keep up with inflation and if the Fed is attacking inflation with more rate hikes than expected, Trump's economy slows down sharply.
To date, although each major bank already has a $ 200 billion + tariff against China as a baseline scenario, no one has been forecasting a recession for at least two years. For the Trump Administration, the strong economy gives them a reason to sue China and redraw global supply chains in the hope that at least some of the reconfiguration will have companies manufacturing in the States. For North American consumers.
Trump wants to reorganize the global supply chain in favor of American manufacturing. His target is China. The market hopes that its target will not eventually become all over Asia. (Photo by Nicholas Kamm / AFP)
Trump's rates show signs of wear
The $ 60 billion imposed since July began to show their effects last month. Firms that started importing products before the harsher commercial taxes in late spring and summer took a break in August. Imports increased only 1.4% from last year, after an average annualized growth of 6.9% over the previous three months. Notably, shipments decreased by 1.4% in August compared to July, marking the first decline on this basis since 2013 and only the third in 11 years, according to research analysts' commercial data of Panjiva, unit of S & P Global Market. Intelligence.
The slowdown was caused by lower shipments from China, likely due to tariffs of $ 34 billion in early July and $ 16 billion in August. "The underlying effect will likely continue in September, while the impact of existing tariffs will take effect throughout the month, but an additional $ 200 billion rights race is likely to be undertaken," he said. said Chris Rogers, director based in London.
The slowdown was not limited to China.
The United States imported 1.4% more than the EU. in August, but down from an average of 9.7% in the previous three months, according to Rogers. The increase in shipments from other major production centers, including Vietnam (10.2% more) and India (6.5%), could be a trend if Chinese manufacturers, often under contract with American multinationals like Apple, seek to diversify their offer. chains throughout Asia.
At the product level, it seems that consumer goods remain largely out of bounds, even if the inputs needed to reach them are a target. Imports of iron and steel are down, but only 0.8% compared to last year. Equipment and electronics increased, but only 0.1%, marking the slowest growth in two years, but hardly changing in all directions.
In contrast, imports of automotive products rose 3.5%, even with weaker car sales here. Rogers thinks US automakers are trying to outpace the more stringent rates.
Finally, toy imports fell 7.6% in August and furniture shipments to China fell 1.0%.
For holiday shopping, however, clothing and toys are mostly immune to the trade war. Apparel imports rose 1.5%, but are down from the record high of about 7.6% in the last three months. None of these growth rates were normal, however, buyers seeking to bypass the rates.
"Retailers are taking a different position," says Rogers. This could be due to the fact that consumer confidence in August has reached its highest level since October 2000. If wages follow inflation, the biggest elephant in the room will be Jerome Powell from the Federal Reserve and not Trump and Xi Jinping battling supply chains.
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A customer is viewing an Apple Inc. iPhone for sale at a Best Buy Co. store in San Antonio, Texas. Photographer: Callaghan O & # 39; Hare / Bloomberg
Retailers and others will soon have to raise prices as tariffs start to weigh in the ongoing trade war between Beijing and Washington. Unless companies can transfer part of their supply chain in China to other low-cost countries, many products entering the United States will simply cost more. If wages do not rise to compensate for this, higher costs for consumers eventually become a tax that ultimately cancels Republican tax cuts.
The United States is prepared to impose on China an import duty of $ 200 billion more. China can not respond in kind because its trade deficit with the United States is too big. They do not matter much.
Bank of America has warned that the latest series of tariffs would harm Apple products as the holidays approach the end of the year. The rates could force Apple to raise prices for some Made in China technologies such as Apple Watch, these ugly headphones, its HomePod headphones and Dr. Dre's Beats, which they acquired in 2014.
CNBC wrote about it on Monday morning. Quoting the report, CNBC's technology editor, Todd Haselton, said the BofA report argued that a 25% tariff "could be substantially destructive of demand" (among others). terms, less buyers). BofA estimates that about one-third of the $ 26 billion in revenue from these products comes from US consumers.
Trump would like Apple to build more of its products in the United States, but unless US workers are willing to make similar bets to China, then these prices will rise. It is there that the tariffs become worrying for the market. The rise in consumer prices leads to an increase in inflation. If wages do not keep up with inflation and if the Fed is attacking inflation with more rate hikes than expected, Trump's economy slows down sharply.
To date, although each major bank already has a $ 200 billion + tariff against China as a baseline scenario, no one has been forecasting a recession for at least two years. For the Trump Administration, the strong economy gives them a reason to sue China and redraw global supply chains in the hope that at least some of the reconfiguration will have companies manufacturing in the States. For North American consumers.
Trump wants to reorganize the global supply chain in favor of American manufacturing. His target is China. The market hopes that its target will not eventually become all over Asia. (Photo by Nicholas Kamm / AFP)
Trump's rates show signs of wear
The $ 60 billion imposed since July began to show their effects last month. Firms that started importing products before the harsher commercial taxes in late spring and summer took a break in August. Imports increased only 1.4% from last year, after an average annualized growth of 6.9% over the previous three months. Notably, shipments decreased by 1.4% in August compared to July, marking the first decline on this basis since 2013 and only the third in 11 years, according to research analysts' commercial data of Panjiva, unit of S & P Global Market. Intelligence.
The slowdown was caused by lower shipments from China, likely due to tariffs of $ 34 billion in early July and $ 16 billion in August. "The underlying effect will likely continue in September, while the impact of existing tariffs will take effect throughout the month, but an additional $ 200 billion rights race is likely to be undertaken," he said. said Chris Rogers, director based in London.
The slowdown was not limited to China.
The United States imported 1.4% more from the EU. in August, but down from an average of 9.7% in the previous three months, according to Rogers. The increase in shipments from other major production centers, including Vietnam (10.2% more) and India (6.5%), could be a trend if Chinese manufacturers, often under contract with American multinationals like Apple, seek to diversify their offer. chains throughout Asia.
At the product level, it seems that consumer goods remain largely out of bounds, even if the inputs needed to reach them are a target. Imports of iron and steel are down, but only 0.8% compared to last year. Equipment and electronics increased, but only 0.1%, marking the slowest growth in two years, but hardly changing in all directions.
In contrast, imports of automotive products rose 3.5%, even with weaker car sales here. Rogers thinks US automakers are trying to outpace the more stringent rates.
Finally, toy imports fell 7.6% in August and furniture shipments to China fell 1.0%.
For holiday shopping, however, clothing and toys are mostly immune to the trade war. Apparel imports rose 1.5%, but are down from the record high of about 7.6% in the last three months. None of these growth rates were normal, however, buyers seeking to bypass the rates.
"Retailers are taking a different position," says Rogers. This could be due to the fact that consumer confidence in August has reached its highest level since October 2000. If wages follow inflation, the biggest elephant in the room will be Jerome Powell from the Federal Reserve and not Trump and Xi Jinping battling supply chains.
