Trade war with China, com­ing to store aisle near you

Lat­est round of pro­posed tar­iffs would push up prices at many U.S. re­tail­ers

Santa Fe New Mexican - - NATION & WORLD - By Jim Tankersley

WASH­ING­TON — The ad­min­is­tra­tion’s trade fight with China may soon be fought in the aisles of Wal­mart, Best Buy, REI and Costco.

If im­ple­mented, the Trump ad­min­is­tra­tion’s lat­est round of pro­posed tar­iffs on Chi­nese goods would fi­nally pull U.S. con­sumers into an es­ca­lat­ing trade war that they have, thus far, mostly watched from a dis­tance.

Ad­min­is­tra­tion of­fi­cials took pains in their first batch of Chi­nese tar­iffs to largely shield con­sumers from see­ing im­me­di­ate price in­creases on prod­ucts they buy. The $34 bil­lion round im­posed July 6 fo­cused largely on goods that busi­nesses pur­chase, which do not typ­i­cally ap­pear on store shelves, such as air­craft parts and in­dus­trial ma­chin­ery.

But the list of $200 bil­lion worth of prod­ucts ad­min­is­tra­tion of­fi­cials pro­posed hit­ting with tar­iffs Tues­day would push up prices at many U.S. re­tail­ers. The tar­iffs would be lower than the pre­vi­ous round — 10 per­cent in­stead of 25 per­cent — and they still mostly avoid ap­parel, one of the most vis­i­ble prod­uct lines that Amer­i­cans buy heav­ily from China. But they in­clude elec­tron­ics, food, tools, house­wares and a wide range of other con­sumer goods. The tar­iffs would not go into ef­fect for sev­eral months — or at all — if the U.S. and China are able to re­solve their dif­fer­ences.

Econ­o­mists say that ex­pan­sion will drive in­fla­tion higher and erode Amer­i­cans’ pur­chas­ing power, po­ten­tially hurt­ing eco­nomic growth. In­fla­tion is al­ready ris­ing, the La­bor De­part­ment re­ported Thurs­day, driven largely by en­ergy prices. The Con­sumer Price In­dex rose 2.9 per­cent in June from a year ago, its high­est rate of the last six years.

The rate is lower — 2.3 per­cent — for core in­fla­tion, which ex­cludes en­ergy and food prices. Home fur­nish­ing prices have barely risen at all dur­ing the past year, and prices for in­for­ma­tion tech­nol­ogy hard­ware and ser­vices have fallen by 2.3 per­cent in that time.

But re­tail groups say a pro­longed trade war could ac­cel­er­ate price in­creases on a wide range of con­sumer goods, giv­ing Amer­i­cans sticker shock on some of their fa­vorite items.

“You keep adding tar­iffs upon tar­iffs,” said Alex Boian, vice pres­i­dent for govern­ment af­fairs at the Out­door In­dus­try As­so­ci­a­tion, whose mem­bers in­clude recre­ation ti­tans such as North Face and Patag­o­nia, “and it re­ally is dif­fi­cult to see a way that this does not hit re­tail prices.”

The lat­est tar­iff list in­cludes sev­eral main­stay prod­ucts of the out­door in­dus­try, such as travel bags, back­packs and the knit fab­ric used in fleece vests. It also in­cludes dog col­lars, sledge­ham­mers, saw blades, base­ball mitts, ski gloves, toi­let pa­per, art sup­plies, ce­ramic tiles, wind­shield glass and an­tiques that are more than 100 years old.

There are also seem­ingly ran­dom — and likely not house­hold — prod­ucts on the list, such as bovine se­men and horse­hair.

More than 1,000 of the 6,000 items on the list are chem­i­cals, ac­cord­ing to an anal­y­sis by Pan­jiva. Nearly 1,000 more are food prod­ucts, in­clud­ing vegeta­bles such as cab­bage, kale, car­rots and beets and hun­dreds of types of fish. Many of those fish, such as Alaskan pol­lock, are caught else­where and pro­cessed in China.

In dol­lar terms, the items most likely to rat­tle U.S. con­sumers are com­put­ers and couches. The Pan­jiva anal­y­sis shows that $50 bil­lion worth of goods sub­ject to tar­iffs are elec­tron­ics, in­clud­ing $17.4 bil­lion in PC com­po­nents and $5.2 bil­lion in desk­top com­put­ers. Nearly $30 bil­lion worth of the prod­ucts are fur­ni­ture. In ad­di­tion, the ad­min­is­tra­tion will soon be­gin im­pos­ing 25 per­cent tar­iffs on more than $3 bil­lion worth of semi­con­duc­tors, po­ten­tially driv­ing up com­puter prices even more.

Any­one who has tried to buy a wash­ing ma­chine this year knows how fast tar­iffs can trans­late to price hikes. The Trump ad­min­is­tra­tion im­posed tar­iffs on im­ported wash­ing ma­chines, of up to 50 per­cent, in Jan­uary. Since then, ac­cord­ing to La­bor De­part­ment data, laun­dry equip­ment prices have jumped 17 per­cent.


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