Trade war with China, coming to store aisle near you
Latest round of proposed tariffs would push up prices at many U.S. retailers
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.