The U.S. is facing its own brand of retail issues, due to the trade war between the U.S. and China.
CGTN’s Jim Spellman reports.
As the holiday shopping season gets underway, U.S. consumers are facing higher retail prices on some items, as the effects of the ongoing U.S.-China trade dispute are being felt.
“Potentially the impact of the tariffs could be bad,” Jonathan Gold of the National Retail Federation said. “As those tariffs go up we are going to see more and more of these products with a tariff on it. Consumers are going to start seeing an impact.”
Over the summer, U.S. President Donald Trump placed a 25 percent tariff on $50 billion worth of Chinese goods. In September, he hit another $200 billion worth of Chinese goods with a 10 percent tariff.
“Unfortunately with the tariff policy we have in place now, simple basics like T-shirts and underwear still have a pretty high tariffs and that hurts lower-income consumers the hardest,” Gold said.
Higher prices for basic necessities means some consumers will have less money for holiday purchases, ultimately threatening U.S. jobs.
“When products cost more, people buy less of it. When people buy less of it, there’s less demand. That means there’s fewer people that would be employed getting that product into the marketplace. So based on existing and the proposed tariffs that are out there, several hundred thousand jobs will be lost in the U.S. economy,” Gary Shapiro, CEO of the Consumer Technology Association said.
Trump has threatened more tariffs – vowing to increase the current 10 percent level on the $200 billion worth of Chinese goods – to 25 percent on January first — and threatening new tariffs on all remaining Chinese imports. This staggered approach will limit the pinch holiday shoppers feel, but retailers… especially small businesses… will feel the pain.
“When you get to 25 percent companies are not going to be able to absorb that cost. It’s going to be a pretty big hit. When you look at the retail industry as a whole, profit margins range from 2 to 3 percent so not very big and especially for the small and medium-size guys,” Gold said.
President Trump will sit down with Chinese President Xi Jinping while both are in Argentina for the upcoming G20 summit. Prospects for a trade deal are anything but clear – but shoppers here in the U.S. will no doubt have a much happier holiday season – if the two leaders can bridge their differences.