Tariffs should spare consumers this holiday season, but maybe not in 2019

As President Donald Trump’s trade war with China escalates, consumers will likely bear the brunt of the latest volley, but it mostly should spare their wallets this holiday shopping season.

Yet another wave of levies is scheduled to go into effect on Jan. 1, meaning shoppers could take a harder hit in 2019.

The most recent round of tariffs on $200 billion worth of products come in addition to $50 billion worth already taxed earlier this year.

The new tariffs, which went into effect Sept. 24, will start at a rate of 10 percent before climbing to 25 percent in January.

Product affected include food like vegetables, fruit and seafood, as well as wool, yarn, electronics, tools and housewares.

Because most large retailers have already brought in their products to prepare for the holiday rush, most shoppers won’t see a big impact as they fill their Christmas stockings, said David French, senior vice president of government relations for the National Retail Federation, a Washington, D.C.-based trade group.

“Still, retail is a pretty low margin business,” Mr. French said. “At some point, those costs are going to find their way into the bottom line price for consumers. At 25 percent, they are very likely to see a lot of those costs passed forward.”

While the National Retail Federation has been a vocal opponent of the tariffs for awhile, other retailers have been speaking up, as well.

Mega retailers Walmart and Target have urged the administration to walk back the tariffs, saying they would hurt consumers, according to reports from CNN Money.

Even Ohio-based crafting chain Jo-Ann Fabric launched an online petition in late August to ask customers to urge lawmakers to make exemptions on hundreds of products.

Seema Shah, retail analyst for Bloomberg Intelligence, anticipates the higher prices will hit consumers in the spring.

Tariffs are basically a tax for the consumer,” Ms. Shah said. “The seller passes it on to the consumer to preserve their margins.”

Jaime Katz, an equity analyst with Morningstar Credit Ratings, said consumers should be able to take on some of the costs. She pointed to low unemployment, strong consumer spending and stable home prices.

“The numbers are robust enough to imply that there’s nothing imminent to say a robust holiday season won’t happen,” she said. “It might be more of a concern for next season in 2019.”

Scott Hoyt, head of consumer economic research at Moody’s Analytics, agreed.

“If you rule out an all-out trade war, it should be fairly manageable for consumers,” Mr. Hoyt said.

Still, Ms. Shah at Bloomberg notes consumers may not be able to handle too hits — spending is up, but many shoppers are using credit to buy. Meanwhile, the cost of necessities — like health care and housing — are increasing.

“That’s why I think you’re seeing more retailers speaking up” she said.