Trade war casualty in US, prices for everyday goods
NEW YORK: The US economy may be roaring ahead, but American consumers face the prospect of paying more for everyday goods, due in part to trade tariffs.
Big companies reporting earnings over the last week or so described price hikes on everything from soda to airplane tickets to household paint and tools.
Some of the price hikes are still in the planning stages and not all companies are sure they will be able to make higher prices stick due to competitive pressures.
“We have implemented price increases for these implemented tariffs,” said Donald Allan, chief financial officer at Stanley Black & Decker, whose products include hammers, saws and power tools.
The 175-year old Stanley expects to generate US$ 190 million more in revenues in 2018 from price hikes, Allan said on a conference call this month.
Soda giant Coca- Cola also recently enacted price hikes in North America, in part because of tariffs on steel and aluminum that raised costs of cans and some
We have implemented price increases for these implemented tariffs. Donald Allan, Stanley Black & Decker chief financial officer
production processes.
Coca-Cola chief executive James Quincey acknowledged that retailers were not thrilled with the development.
“Clearly these conversations are difficult, I think it’s working its way through,” he told analysts.
“Ultimately the beverage industry is not the only industry that is facing pressure from changing imports and the need to take pricing,” he said.
“That’s just partly the general environment.”At paint company Sherwin-Williams, executives hinted at price hikes due to inflation in petroleum-linked commodities.
“Our historic practice has always been to talk with our customers first and then the investment community,” chief executive John Morikis told Wall Street analysts.
“We are going to protect our margins and we’re going to talk to consumers first. And you can connect the dots from there.”
Analysts see a number of factors behind higher commodity prices, with US tariffs on steel and aluminum imports a frequently- cited catalyst.
But while trade actions by US President Donald Trump have gotten much of the attention, analysts note that prices of many goods – including steel and oil – were already elevated before the trade war took center stage.
Higher inflation also typically accompanies increased macroeconomic growth, which was estimated on Friday at 4.1 per cent in the second quarter by the US government, the fastest level in six years.
Inflation also surfaced as a concern in the first- quarter earnings season, but more companies are now discussing price hikes and some companies said the problem has worsened as Trump has expanded the attack to more countries and regions and as the steel and aluminum tariffs moved from threat to reality. — AFP