Washington has slapped a new 15% tariff on $300 billion worth of Chinese goods. The taxes will be imposed in two stages. The first batch of affected imports include smart watches, TVs, and footwear.
A second batch, including cellphones, laptops, toys, and clothing, get hit with the new tax on December 15th.
CGTN Los Angeles correspondent Ediz Tiyansan has been speaking to L.A. retailers, who are expected to pay the price in the short-term.
Omi Hong owns a small retail business, selling footwear she imports from China. Once a lucrative business, she says the new tariffs are putting immense pressure both on her and her customers.
“Customers, who buy shoes from here, which is made in China, they are very sensitive on the pricing. So, 10% means a lot. We’re not a name brand, we’re not from-Italy shoes, so like a 10% mark-up will make the customer more hesitant to buy that,” said Hong.
Then it got worse. After threatening a 10% tariff, President Donald Trump raised it to 15%. Targeting a vast number of items from footwear to TVs and smart watches, starting September 1st, and many types of apparels, toy, laptops and cellphones, starting mid-December.
Hundreds of American companies urged U.S. President Donald Trump on Wednesday to cancel the proposed higher tariffs on Chinese imports.
The vice president of the American Apparel and Footwear Association says the unprecedented amount of taxes imposed in the last minute could force many of their members to make difficult decisions.
“That money’s going to come from somewhere. Does it come from price increases in the future? Does it come from taking money out of their savings? Money out of their profits? Money out of their supply chains? Are they forced to not hire so many people? Or god forbid let people go? It’s extraordinarily, extraordinarily disruptive process, and very costly, too!” said Stephen Lamar, Executive Vice President for American Apparel and Footwear Association.
Analysts believe the latest decision could have a knock-on effect on other industries like shipping and logistics, and while it’s possible the world’s two largest economies can absorb the short-term impact of these tariffs, many fear that a continued escalation could have far-reaching consequences.
“I think one of the reasons why people think there’ll be a recession next year is that there’s some negative effect on the U.S. economy, negative effect on the Chinese Economy, but the knock-on effects on the global economy, which are kind of more dependent on trade than us or China, are going to be large, especially for Europe and Japan,” said Economics Professor at the University of Southern California Robert Dekle.
With no sign of any resolution in the ongoing trade dispute between the world’s economic powerhouses, a great deal of uncertainty looms for many retailers, and consumers will have no choice but to brace for price hikes during the holiday shopping season.