Despite Reprieve, New Tariffs Will Hit Wide Range of Consumer Goods.

Levies of 10% on some apparel, electronics, watches and sporting goods from China start Sept. 1, followed by smartphones, laptops and toys Dec. 15

WASH­ING­TON—Pres­i­dent Trump may have scaled back tar­iffs on Chi­nese goods this week to spare hol­i­day shop­pers, but con­sumers are still likely to feel a pinch.

An ar­ray of ap­parel, elec­tron­ics, watches and sport­ing goods from China will be hit with levies of 10% start­ing Sept. 1. The value of those and other prod­ucts sub­ject to the new tar­iffs to­taled $111 bil­lion last year, ac­cord­ing to a Wall Street Jour­nal analy­sis. While econ­o­mists say the im­pact won't de­rail the U.S. econ­omy, it could slow fourth-quar­ter growth.

"It is not en­tirely ac­cu­rate to la­bel this a de-es­ca­la­tion," said Chris Krueger, man­ag­ing di­rec­tor of the Cowen Wash­ing­ton Re­search Group. He likened the pol­icy to telling some­one: "I was go­ing to break both of your arms on Sept. 1—now I am only go­ing to break your el­bow."

Bei­jing wasn't im­pressed by the ratch­et­ing back of tar­iffs, ei­ther. On Thurs­day, an of­fi­cial with the State Coun­cil's Cus­toms Tar­iff Com­mis­sion de­nounced the rise in tar­iffs and said "China would have no choice but to take nec­es­sary coun­ter­mea­sures."

Mr. Trump did side­line tar­iffs on smart­phones, lap­tops, toys and other Chi­nese im­ports val­ued last year at $156 bil­lion, say­ing Tues­day that he wanted to soften the im­pact on con­sumers for the hol­i­day sea­son. But those tar­iffs are set to kick in Dec. 15, and mean­while the U.S. will in two weeks be col­lect­ing tar­iffs on about $361 bil­lion in Chi­nese im­ports—the levies on the $111 bil­lion worth of an­nual im­ports that starts Sept. 1, plus pre­vi­ous tar­iffs on $250 bil­lion in Chi­nese goods.

Pre­vi­ous rounds of tar­iffs have largely spared con­sumers, with the ad­min­is­tra­tion tar­get­ing items such as telecom­mu­ni­ca­tions equip­ment, metal al­loys and me­chan­i­cal de­vices that tend to be pur­chased by busi­nesses.

That changes next month. About $33 bil­lion in ap­parel, shoes and hats are among the items sub­ject to a 10% tar­iff on Chi­nese im­ports be­gin­ning Sept. 1, ac­cord­ing to a Jour­nal analy­sis of data from the U.S. Trade Rep­re­sen­ta­tive's of­fice and the Cen­sus Bu­reau.

The Sept. 1 list also in­cludes about $27 bil­lion in elec­tron­ics. That in­cludes a bevy of rou­tine items rang­ing from wire­less sur­veillance cam­eras to solid-state dri­ves and some tele­vi­sions, the Jour­nal's analy­sis found.

All told, 69% of con­sumer goods from China will be sub­ject to tar­iffs start­ing Sept. 1—up from 29% cur­rently, ac­cord­ing to Chad Bown, a se­nior fel­low at the Pe­ter­son In­sti­tute for In­ternational Eco­nomics.

Mr. Trump held off on im­pos­ing all the threat­ened tar­iffs fol­low­ing warn­ings from re­tail­ers who said the levies could dim prospects for the hol­i­day shop­ping sea­son, the Jour­nal has re­ported. The re­treat also came as fi­nan­cial mar­kets shud­dered over fears that the U.S.-China trade war could put the global econ­omy in a funk.

In de­ter­min­ing which tar­iffs to post­pone, one fac­tor ap­pears to have been the avail­abil­ity of al­ter­na­tives to Chi­nese im­ports, ac­cord­ing to the Jour­nal analy­sis. A re­view of the tar­iff list in­di­cates that tar­iffs were gen­er­ally post­poned for im­port cat­e­gories, such as videogame con­soles, where China ac­counted for about 75% or more of im­ports in 2018.

Source: census Bureau. US Trade Representive.

By Dec. 15, how­ever, just about every­thing com­ing from China will be sub­ject to tar­iffs.Only $19.8 bil­lion of Chi­nese goods aren't cov­ered, in­clud­ing phar­ma­ceu­ti­cals, some med­ical equip­ment and or­ganic chem­i­cals, and items un­der spe­cial im­port pro­vi­sions.

The of­fice of the U.S. Trade Rep­re­senta­tive has said there will be a process for com­pa­nies to seek ex­clu­sions from tar­iffs, how­ever, if their busi­ness would be un­duly dam­aged by the new du­ties.

But that is not the same as say­ing the ef­fects will be un­no­tice­able to the U.S. econ­omy. The di­rect ef­fects of the new­est tar­iffs would slow growth in the fourth quar­ter by about 0.1 per­cent­age point, ac­cord­ing to Gre­gory Daco, chief U.S. econ­omist for Ox­ford Eco­nomics, a fore­cast­ing and eco­nomic analy­sis firm. He ex­pects the econ­omy to grow about 2% in the fourth quar­ter.

That dam­age is likely to per­sist into 2020, he said, and could be am­pli­fied by grow­ing aware­ness of the tar­iffs, and grow­ing un­cer­tainty from busi­nesses and fi­nan­cial mar­kets about what to ex­pect from fu­ture trade pol­icy.

"The un­cer­tainty that per­tains to these tar­iffs is go­ing to have an ef­fect be­yond the tar­iffs," said Mr. Daco. "It's not just about goods cost­ing more, it's about the cost and time it takes for busi­nesses to plan around these tar­iffs and trade ten­sions."

Over­all in­fla­tion has been mod­est in the past year, with the La­bor De­part-ment's con­sumer-price in­dex up about 1.8% in the 12 months through July. But many items in the con­sumer-price in­dex, from rent to health care to higher ed­u­ca­tion costs, don't have prices that are sig­nif­i­cantly in­flu­enced by tar­iffs.

The Trump ad­min­is­tra­tion fo­cused its early tar­iffs on in­ter­me­di­ate or cap­i­tal goods, such as ma­chin­ery pur­chased by busi­nesses. Price in­creases on those items, though a hit to the U.S. im­porters pay­ing the tar­iffs, aren't ob­vi­ous at the con­sumer level.

But when tar­iffs have hit con-sumer goods, the price in­creases for re­tail cus­tomers have been more ap­par­ent. Ac­cord­ing to a Gold­man Sachs analy­sis of La­bor De­part­ment data ear­lier this month, prices have risen by 3% among the cat­e­gories of items that have faced tar­iffs, such as laun­dry equip­ment and fur­ni­ture.

Prices have de­clined by about 1% for core goods that haven't faced any new tar­iffs.

That backs up the find­ings of most re­search ex­am­in­ing the tar­iffs, such as two high-pro­file stud­ies ear­lier this year—one from a quar­tet of econ­o-mists, in­clud­ing the chief econ­omist of the World Bank, work­ing on a Na­tional Sci­ence Foun­da­tion grant, and an­other from the Cen­tre for Eco­nomic Pol­icy Re­search writ­ten by econ­o­mists from the Fed­eral Re­serve Bank of New York, Prince­ton and Co­lumbia uni­ver­si­ties.

Both con­cluded that al­though tar­iffs are for­mally as­sessed on U.S. im­porters when they bring in goods from for­eign coun­tries, the costs are passed on al­most en­tirely to consumers.

August 17, 2019

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August 17, 2019

Voices4America Post Script. If you are wondering how #TrumpTariffs have and will affect you as a consumer, especially starting September 1, read what the WSJ said. This was their top story today. Share this to spread the word. #TrumpSlump