By Friday, tariffs on China could more than double.
The moment brands and retailers have all been bracing for, but hoping never actually materialized, may be on the horizon: President Trump said Sunday he will raise tariffs on $200 billion worth of China-originating goods from 10 percent to 25 percent.
After a tariff freeze over the last several months, while negotiators from the U.S. and China met to work out a trade deal—which in recent weeks has been called “productive” and “close to done”—Trump on Sunday sought to escalate the trade war to a point no one in the industry hoped to reach. His plan, as it stands, is to add more tariffs on goods from China after all.
And those tariffs are set to increase Friday.
In a tweet on Sunday, Trump said: “For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….”
Continuing, the president tweeted: “….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
The new tariff hike, which will impact $200 billion worth of goods as soon as Friday, could turn into even more tariffs on an additional $325 billion worth of goods if the president doesn’t start seeing trade talks go his way.
Whether a negotiating tactic ahead of a new round of talks set to take place in Washington Wednesday, the escalation has already roiled markets and will prove an upset to the industry if new tariffs are to be enforced within less than a week. China has reportedly pulled back on some earlier commitments it had made, and Trump’s tweets may be a warning against heading in that direction.
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That’s at least according to what White House economic advisor Larry Kudlow told Fox news.
“The president is, I think, issuing a warning here, that, you know, we bent over backwards earlier, we suspended the 25 percent tariff to 10 and then we’ve left it there. That may not be forever if the talks don’t work out,” Kudlow said.
China is reportedly considering delaying this week’s trade talks as a result of the tariff threat.
As far as the impact for brands and retailers, substantial disruption could lie ahead.
In response to Trump’s tariff threat, National Retail Federation senior vice president for government relations David French, said, “Tariffs are taxes paid by American businesses and consumers, not by China. A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact. If the administration follows through on this threat, American consumers will face higher prices and U.S. jobs will be lost.”
Citing a report from Trade Partnership, French reiterated that increasing the tariffs to 25 percent on $200 billion worth of goods from China could cost the U.S. 934,000 jobs, cost the average family of four $767 annually, and cost the U.S. a 0.37 percent reduction in GDP.
NRF has been clear that it agrees that changes are needed for China’s trade practices, however, French continued, “it makes no sense to punish Americans as a negotiating tactic.” As such, NRF is imploring the Trump administration to reconsider the tax hike and continue negotiations until they can reach a deal.