WASHINGTON — Expect a direct hit on many U.S. consumers from President Donald Trump’s latest round of tariffs on Chinese imports. He had no intention of pulling back on import taxes set to kick in today.
“They’re on. They’re on,” the president told reporters Friday before departing for a weekend stay at Camp David.
Americans were largely spared from higher prices in his previous rounds of trade penalties. No longer. The 15% tariffs on $112 billion in Chinese imports will apply to items ranging from smartwatches and TVs to shoes, diapers, sporting goods and meat and dairy products.
For the first time since Trump launched his trade war, American households faced price increases. Many U.S. companies said they would be forced to pass on to customers the higher prices they had to pay on
Despite the looming pocketbook pain for Americans, Trump tried to frame the tariffs as putting the United States “in an incredible negotiating position” with Beijing. “It’s only going to get worse for China.”
For more than a year, the world’s two largest economies have been locked in a high-stakes duel marked by Trump’s escalating penalties on Chinese goods and Beijing’s
The two sides have held periodic talks that seem to have met little progress despite glimmers of potential breakthroughs. All the while, they have imposed tariffs on billions of each other’s products in a rift over what analysts say is Beijing’s predatory tactics in its drive to become the supreme high-tech superpower.
“We’re going to win the fight,” Trump asserted.
American consumers so far had been spared the worst of it: The Trump administration had left most everyday household items off its tariff list (valued at $250 billion in Chinese products so far) and instead targeted industrial goods.
Under the new tariff schedule, 69% of the consumer goods Americans buy from China were facing his import taxes, compared with 29% now.
Higher tariffs also were set to kick in for another batch of Chinese products — $160 billion worth — on Dec. 15. By then, roughly 99% of made-in-China consumer goods imported to the United States will be taxed, according to calculations by Chad Bown of the Peterson Institute for International Economics.
Overall, Trump’s trade war will have raised the average tariff on Chinese imports from 3.1% in 2017, before the hostilities
began, to 24.3%.
“The bottom line is that, for the first time, Trump’s trade war is likely to directly raise prices for a lot of household budget items like clothing, shoes, toys, and consumer electronics,” Bown wrote in an report.
Trump famously declared that trade wars are “easy to win.” But for months, he falsely claimed that China itself paid the tariffs and that they left Americans unscathed. In fact, U.S. importers pay the tariffs. They must make a high-risk decision: absorb the higher costs themselves and accept lower profits or pass on their higher costs to their customers and risk losing business.
This has become an ever-more-difficult decision.
After years of ultra-low inflation, consumers have grown more resistant to price hikes, especially when they can easily compare prices online for household products and choose the lowest-price options. For that reason, many retailers may choose not to impose the cost of the higher tariffs on
The higher costs U.S. importers faced could be offset somewhat by the declining value of China’s currency, which has the effect of making China’s products somewhat less expensive in the United States.