Since Donald J. Trump was re-elected President earlier this week, tariffs have received considerable attention.
As previously reported, Trump repeatedly said on the campaign trail that he plans to increase the percentage of tariffs levied on companies importing into the United States, from where they have remained since they were implemented in 2018, during his first term in office. To that end, he has said he is committed to imposing a 10%-to-20% tariff on all imports regardless of what country they come from, and 60% or higher on goods entering the U.S. from China.
When the Trump administration first rolled out its plan in mid-2018, it was comprised of a 25% tariff on $50 billion worth of goods imported from China, under the purview of an “America First” policy geared towards a more fair and beneficial position for U.S. companies, as well as focusing on: protecting domestic property and intellectual property; stopping noneconomic transfers of industrially significant technology and intellectual property to China; and enhancing access to the Chinese market. These tariffs subsequently ignited a trade war between the United States and China that continues today.
Leading up to the election, the Washington, D.C.-based National Retail Federation (NRF) issued a study indicating that United States consumers could see their collective spending power reduced by between $46 billion and $78 billion per year if the incoming Trump administration implements new tariffs.
In its findings, NRF noted that even though some U.S. manufacturers could see benefits from tariffs, at the same time, the gains to U.S. producers and also the U.S. Treasury derived from tariffs “do not outweigh overall losses to consumers.” Putting that into perspective, it explained that, as an example, the price of a $40 toaster oven, after tariffs, would be between $48-to-$52, and a $50 pair of sneakers would come in between $59-to-$64, and a $2,000 mattress and box spring set would rise to $2,128-to-$2,190.
Key survey takeaways cited by NRF include:
- the proposed tariffs would have a significant and detrimental impact on the costs of a wide range of consumer products sold in the United States, particularly on products where China is the major supplier;
- the increased costs as a result of the proposed tariffs would be too large for U.S. retailers to absorb and would result in prices higher than many consumers would be willing or able to pay;
- consumers would pay $13.9 billion to $24 billion more for apparel, $8.8 billion to $14.2 billion more for toys, $8.5 billion to $13.1 billion more for furniture, $6.4 billion to $10.9 billion more for household appliances, $6.4 billion to $10.7 billion more for footwear, and $2.2 billion to $3.9 billion more for travel goods; and
- based on current trade, average tariff rates for all categories examined would exceed 50% in the extreme tariff scenario, up in most cases from single or low double digits