The National Retail Federation (NRF) on Friday released a new study examining key product categories and the negative impact on American consumers of the 25 percent tariffs on $300 billion in Chinese goods the Trump administration has threatened to impose.
The new report commissioned by NRF and prepared by the Trade Partnership Worldwide projected U.S. consumers would pay $4.4 billion more each year for apparel, $2.5 billion more for footwear, $3.7 billion more for toys and $1.6 billion more for household appliances if the administration proceeds with the additional tariffs.
NRF’s report said prices of apparel from China would increase 22 percent if the tariff are imposed, while overall U.S. prices from all sources combined would rise by 5 percent. As a result, it said U.S. consumers would be forced to reduce overall purchases by 11 percent.
“The biggest winners from tariffs on Chinese apparel are producers in other countries,” the report said. “Manufacturers in Vietnam would see annual export revenues grow by about $660 million. Producers in Indonesia, Mexico, India, Honduras, Bangladesh and El Salvador each would see annual export revenues grow by about $150 million to $300 million per year.”
NRF senior vice president of government relations David French said during testimony prepared for a hearing at the U.S. Trade Representative’s Office, said, “We support efforts to achieve better trade deals, but American consumers shouldn’t be caught in the crosshairs. It’s time to reevaluate a strategy based solely on tariffs and work with our allies to put international pressure on China.”
French said for most of the consumer products on this list of products that could be slapped with the punitive tariffs, there are few alternative sources of supply.
“It would be impossible for all market participants in our industry to simultaneously move sourcing to other countries,” he said. “The capacity does not exist… In the short term, retailers would be forced to continue to use Chinese suppliers and pass on higher costs to their customers just in time for the holiday shopping season.”
As part of monthly consumer surveys conducted by Prosper Insights & Analytics, NRF has been tracking the public’s growing concern over the trade war. The June survey found 81 percent of consumers are “concerned the ongoing trade war will cause prices to increase,” a 12 percent increase since November.
On the other side of the China tariff argument, Kim Glas, CEO of the National Council of Textile Organizations, testified on Thursday at the USTR hearings that NCTO supports the administration’s efforts to crack down on China’s abuse of intellectual property rights through the use of the Section 301 mechanism, while also calling on the administration to include finished apparel and home furnishings in any retaliatory tariffs against China.
“To effectively respond to China’s predatory practices in our sector, we believe the administration needs to address the exports from China that are disrupting our market and distorting trade–exports of end items to the United States,” Glas said.
NCTO is “pleased the proposed Tranche 4 includes finished imported items from China, which have the most significant impact on U.S. employment, production and investment,” Glas said. “We believe this move will lead to the re-shoring of production to the United States and the Western Hemisphere production platform, and will also address and mitigate China’s rampant trade distortions.”
However, Glas said the domestic textile industry has serious concerns that certain inputs “already vetted by the administration and removed from previous retaliatory tariff lists are back on this list for proposed duties. These inputs include but are not limited to machinery, dyes and chemicals and textile components not available domestically, like rayon staple fiber.”
“Adding tariffs on imports of manufacturing inputs that are not made in the U.S. in effect raises the cost for American companies and makes them less competitive with China,” Glas said, calling for the earlier exclusion reviews to be upheld.