What's the impact of tariffs on shoppers
National Retail Federation CEO Matthew Shay says there will be measurable impact on consumers.
Are the tariffs President Trump has imposed on imports from China a good move or a harmful one? That’s a debatable point. What’s not debatable is who will pay for these tariffs. To find out, just look in the mirror.
President Trump’s claim that China will pay for the tariffs is as valid as his claim during his election campaign that Mexico will pay for the wall he wants to build along our southern border.
Just as we will pay for the wall with our tax dollars, we will pay for the tariffs on Chinese imports when we go shopping for thousands of products made in China.
TRUMP ANNOUNCES INCREASED TARIFFS ON CHINA IN LATEST TRADE WAR SALVO
Some manufacturers in the U.S. and elsewhere might also raise prices, because the higher prices on Chinese goods will enable them to do so while still being competitive. In addition, some U.S. manufacturers that rely on imported parts and materials from China will very likely raise prices to account for the added cost of these imports.
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Tariffs and international trade are complicated topics. Here’s what you need to know to understand what is going on regarding this important issue.
A tariff is a tax put onto goods purchased from one country when those goods arrive in another country. The tax is initially paid when the goods arrive. But the price of the goods is usually raised to recover the cost of the tax – hitting consumers in the wallet when they buy those products.
For example, let’s say a manufacturer charges U.S. stores $1,000 for an appliance made in China. On Sunday, when the U.S. slaps a 15 percent tariff on about $300 billion in annual Chinese imports, the tariff on the $1,000 Chinese appliance would be $150. In most cases, all or a large part of that $150 tariff would be passed on to U.S. consumers in the form of a higher price for the appliance.
Tariffs have been used for centuries to punish other countries and to protect domestic industries and governments.
A trade war – with tariffs going back and forth, tit-for-tat – has devastating consequences. But like any war, that doesn’t necessarily mean that those consequences are in vain or not worth the sacrifice.
The Chinese retaliatory tariffs have sharply cut the incomes of many U.S. farmers by cutting their sales to China, even forcing some out of business. U.S. companies that sell products to China are also seeing a drop in their sales to China because the Chinese tariffs make their products more expensive and uncompetitive.
However, the decision by the Trump administration to downplay and deliberately mislead the American people about the impact of tariffs that it has placed on Chinese goods needs to stop.
U.S. importers are shouldering almost 95 percent of the price change from tariffs. White House trade advisers are quick to point out how the Chinese are devaluing their currency and taking other actions. But nevertheless, Americans are paying for this trade war out of our own pockets – not China, as the Trump administration claims.
The tariffs imposed by President Trump put almost $100 billion in taxes on goods imported into the United States from China each year. This includes thousands of products. You can find the products being hit with new U.S. tariffs Sunday on this list that is 122 pages long, meaning millions of us purchase these products.
To put this in perspective, the new tariffs could cost the average American household almost $800 annually.
On the other side of the coin, American farmers (as well as many industries) have been hit hard by the retaliatory tariffs imposed by China.
The Chinese retaliatory tariffs have sharply cut the incomes of many U.S. farmers by cutting their sales to China, even forcing some out of business. U.S. companies that sell products to China are also seeing a drop in their sales to China because the Chinese tariffs make their products more expensive and uncompetitive.
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Sure, the federal government has doled out about $8 billion so far in aid to U.S. farmers (with a promised $28 billion), but where do you think that money is coming from? Yup, time to look in the mirror again, because the money going to farmers comes from the taxes you pay. We can add that to the cost.
Overall, the cost of these tariffs on the American people could be hundreds of billions of dollars and a whole lot of suffering along the way.
The overarching issue of whether tariffs are the right tool to stand up to the Chinese government in order to set up a good, fair and free trade market for future generations is a separate question altogether. President Trump contends the short-term pain will be worth the long-term gain.
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But if we are going to continue to escalate this trade war, the American people need to know the real numbers, be treated like adults, and make their own decision about whether to support it.
The one thing Americans have always had is resilience and the ability to suffer together for a greater cause. The Trump administration should stop fudging the numbers and let Americans decide for themselves whether they want to support this trade war – but with all the facts at hand.
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