President Trump has threatened to add a 10% tax on at least an extra $200 billion of Chinese-made products, conceivably doubling that to as much as $400 billion if China strikes back.
Such a move could affect around 80% of all Chinese imports and guarantee trainers, apparel, smart phones and even toys would be targeted, Bloomberg announced. The first round of tariffs, on $34 billion of Chinese products, became effective on July 6 2018.
In addition to the tariffs on $34 billion, an additional set of duties on $16 billion of goods against the nation is still pending. China has said it will hit back matching each of those amounts in tit-for-tat tariffs against the U.S., thus making official a trade war that has brewing since Trump called for extra duties in March.
David French, senior VP of government relations at the National Retail Federation told Bloomberg,
“Retailers have already settled on the buying choices for what will be on the shelves in the fall for Christmas holidays. In the event that things aren’t imported before any conceivable duties become effective, it will prompt higher costs, a cut into consumer spending and a cut into consumer certainty — and we are extremely worried about it.”
One major issue is that supply chains can’t be moved overnight, especially for a retail sector that generally place orders months before items arrive in stores. U.S. companies have spent years making business relationships overseas and have come to rely on the expertise and reliability of Chinese factories. In the toy industry there are few options outside of China, especially with more complicated items.
A heightening trade war with China could put a major dent into the holiday season.
Climate action NGO WRAP today publishes annual updates of its