Why tariffs could really pinch retailers this time
livemint.com
Subscribe to enjoy similar stories. Many retailers came through relatively unscathed by Donald Trump’s tariffs imposed starting in 2018. This time around, though, tariffs have the potential to bite more.
Trump has proposed a universal tariff of 10% to 20% on all imports to the U.S. and a 60% or more tariff on goods from China. Somewhat confusingly, Trump has also separately threatened 25% tariffs on goods from Canada and Mexico and an additional 10% tariff on China over immigration and drug issues.
So while the ultimate shape of tariff policy under Trump’s second administration remains unclear, it seems likely that tariffs will be more punitive and wide-ranging than the previous round of Trump-era tariffs, which started in 2018 and were focused on China. Retailers diversified their supplier base as a result: China accounted for 26% of U.S. textile and apparel imports last year, down from 37% in 2017.
Much of that has shifted to Vietnam, India and Bangladesh. The tariff impact was clearest for retail categories hit in 2018. For example, a 20% tariff went into effect on imported residential washing machines in early 2018.
In response, the price of washers rose by nearly 12% in the months following the tariffs, according to a 2019 study from economists at the Federal Reserve Board and the University of Chicago, implying that consumers absorbed most but not all of the tariff costs. Contrary to what Trump contends, exporters didn’t bear those costs: A study from the U.S. International Trade Commission concluded that the cost of the 2018-2019 tariffs was borne entirely by the U.S.
importers. Other retailers were cushioned from the full force of those last tariffs because of the timing. For example, the first Trump
. Read more on livemint.com
