Tariffs could hit wallets at holidays
Trump’s China plan takes aim at array of consumer goods
President Trump’s threat to ramp up tariffs on Chinese imports takes direct aim at American consumers, who face the prospect of higher prices for thousands of Chinese goods from frozen fish sticks to vacuum cleaners.
Shoppers could start seeing price increases on perishable Chinese food imports, including seafood, within days of implementation. Other prices might take longer to react, if they do at all.
Trump — fed up with a U.S. trade deficit with China that reached a record $376 billion last year — has instructed aides to move forward with 25% tariffs on $200 billion worth of imported Chinese goods spread across 6,031 product categories, Bloomberg reported Friday. However, the announcement was delayed as administration officials consider revisions based on complaints by industry and the public.
The list of goods currently includes can openers, pizza cutters, ice cream scoops and other basic housewares that Bradshaw Home Inc. in Rancho Cucamonga imports from China and sells to retailers nationwide, and prices for those products would head higher, said Brett Bradshaw, copresident of the company.
“We will be forced to pass
along the higher costs” because “there is no extra margin to absorb such an increase” in the tariffs, Bradshaw said in an email. “We believe our retail partners will, in turn, be forced to pass along the increase to consumers.”
A wide array of consumer electronics would be hit, too. Apple Inc. said in a Sept. 5 letter to the U.S. trade representative that the tariffs would be levied on its Apple Watch, AirPod wireless headphones, chargers and certain other products, and that the result would be “higher prices for U.S. consumers.”
The tariffs, which effectively are a tax, would come on top of initial tariffs the United States already plans to charge on $50 billion of Chinese imports, mostly steel, aluminum and other products that directly affected manufacturers more than consumers. The Chinese matched those tariffs on U.S. goods.
But the tariffs on $200 billion of Chinese products listed by the U.S. trade representative’s office would apply to a broad swath of consumer goods imported from China, including baseball gloves, tires, handbags, plywood, carpet, oil filters, drawing paper, fabrics and shoelaces, to name only a few.
Trump said this month that unless the two nations reconcile on trade policy, he’s also ready to more than double the amount of Chinese goods subject to new tariffs. “I hate to do this, but behind that there is another $267 billion ready to go on short notice if I want,” he told reporters on Air Force One.
It would be up to retailers to decide whether, or how soon, to pass along the tariffs to consumers.
Grocery shoppers could see higher prices for perishable Chinese food imports within a matter of days or weeks because those goods quickly work their way through the stores’ supply chains, analysts said.
Otherwise, while the analysts don’t expect retailers of many other Chinese goods to hike prices immediately to help offset the tariffs, they warned that prices could rise just as shoppers are about to spend heavily during the holidays.
“It’s not going to happen today, but by the holiday shopping season they’ll see it,” Stephen Cheung, president of World Trade Center Los Angeles, which promotes trade and foreign investment in the region, said of higher prices.
The potential impact on California is mixed. China was by far the top exporting nation to California last year, sending $159.1 billion of goods to the state, or 36.1% of the total from foreign nations, according to the U.S. Census Bureau. Conversely, China imported $16.4 billion of goods from California.
The list of goods California buys from China is led, on a dollar basis, by laptops and other personal computers, according to research firm Beacon Economics. That’s followed by smartphones, office-machine parts, televisions/monitors and furniture.
“The goods at the top of the list are goods that Californians cherish, like to play with and look forward to giving other people for Christmas,” said Jock O’Connell, Beacon Economics’ international trade advisor.
On the plus side for consumers: Finished computers, smartphones and flat-panel TVs are not among the 6,031 Chinese items Trump wants to hit with tariffs next. But many other consumer electronics are on the list.
The Consumer Technology Assn., a trade group for electronics suppliers, warned last month that “American shoppers will have to pay between $1.6 billion and $3.2 billion more for connected devices such as gateways, modems, routers, smart speakers, smartwatches or other Bluetoothenabled products” because of the tariffs.
How much more consumers pay for electronics, and how soon, could depend in large part on e-commerce giant Amazon.com Inc., whose prices are matched by Best Buy Co. and some other rivals. Amazon declined to comment on its pricing, and Best Buy referred inquiries to the Consumer Technology Assn.’s statements.
Whether consumers quickly see higher prices on any of the thousands of Chinese imports “depends on what the importer is going to do,” and that can vary depending on how much inventory from China it buys before the tariffs take effect, O’Connell said.
But Cheung said most retailers try to keep inventories to a minimum and eventually “they’re going to pass [the tariffs] on to consumers.”
Higher prices would test the recent increase in U.S. consumer confidence — which last month stood at its highest level in 18 years, according to the Conference Board — and recent monthly gains in consumer spending.
“This is coming at a very sensitive time” with the holiday season ahead, Cheung said.
“In addition, our economy — especially in Los Angeles and in California overall, because of our dependence on international trade — would be one of the areas really hit the most” by the added tariffs, he said.
That’s because any decline in consumer demand caused by tariff-related price hikes could hurt the enormous shipping, transportation and logistics industries related to the ports of Los Angeles and Long Beach and elsewhere in California. Manufacturing in the state also could be affected, Cheung said.
Several California-based firms that buy products from China, including Bradshaw Home, already had joined with companies nationwide in warning the Trump administration that the added tariffs would mean higher prices for shoppers.
In Bradshaw Home’s case, there “are no alternative sources for the supply of these products,” Bradshaw said at a USTR hearing in Washington on Aug. 21.
He also said that raising prices due to the tariffs would “have a disparate impact on lower-income households that rely on our products ... to clean their homes and safely cook their food.”
Also testifying was Richard Firehammer, chief legal officer of Santa Ana-based Universal Electronics Inc., whose Ecolink unit in Carlsbad makes wireless security sensors and home-automation products.
Ecolink “cannot absorb” the higher tariffs and “would be forced to pass the additional costs on to customers who, in turn, would pass the additional costs on to their customers in the form of increased upfront equipment costs and monthly subscription fees,” Firehammer said.
The result, he said, would be “the inability for many U.S. consumers to afford these systems and services.”