President Donald Trump’s new tariff threat would no doubt leave American shoppers feeling more financial pain from his simmering trade war with China.
Those taxes would bring some of America’s most-popular consumer goods into the fight—from Apple Inc.’s iPhones to Nike sneakers. Trump has thus far avoided them in an attempt to minimize a public backlash over paying higher prices.
The latest turn in the dispute, now in its second year, came Monday, just days before what was potentially the final round of talks with China on a deal. Trump, once again channeling “Tariff Man,” threatened to more than double import levies on Friday against $200 billion of made-in-China goods.
On Twitter, he accused the Chinese of hampering progress in negotiations, saying he plans to hike tariffs to 25% from the current 10%.
Trump also went further, saying he’d slap 25% tariffs on an additional $325 billion of Chinese imports, a move that would effectively tax everything the world’s largest factory sends to the U.S.
Trade War Could Hit Americans From Head to Toe
“We’re trying to figure out where this is heading,” said David French, senior vice president of government affairs for the National Retail Federation. “Whether this is a negotiating tactic or an out-and-out escalation.”
For now, investors saw it as the latter, as retailer and consumer products stocks sold off amid a global rout. The SPDR S&P Retail ETF declined as much as 1.8% Monday.
Nevertheless, reports saying the Chinese delegation was still traveling to the U.S. to continue negotiations is “encouraging,” French said.
If Trump makes good on his latest threats, here’s a sampling of retail sectors where U.S. shoppers might feel the most pain:
Nike, Under Armour
From marathoners to weekend activewear fans, sneaker buyers across America will have to pay more for running, tennis, or soccer shoes, some of the $11.4 billion of footwear the U.S. imported last year from China.
The American Apparel and Footwear Association said consumers are already facing higher prices after almost a year of trade tensions.
“Now the crisis will only get worse,’’ it said in a statement. The association estimates a family of four will pay at least $500 more a year on apparel and footwear if the threatened tariffs are levied.
Despite a shift toward lower-cost manufacturing bases like Vietnam and Bangladesh, China is still the single biggest source of apparel globally. A 2018 survey by the U.S. Fashion Industry Association said companies still source 11% to 30% of their apparel from Chinese factories. While this is down from 50% the year before, China is still the most important source of clothing.
Nike has almost a fifth of its factories located in China, accounting for 13% —144,000 people—of the company’s supplier workforce. For footwear alone, a quarter of its factories are located in China.
Sporting enthusiasts, from cyclists to golfers, shopping at Under Armour and other exercise outfitters, will find their gear dearer too. Pretty much every part of a bicycle, from saddles and spokes to tubes and frames, would be slapped with a 25% tariff. The same goes for China-made golf bags, baseball mitts and batting gloves. If you’re on the water, Trump’s taxes would sink Made-in-China inflatable boats and canoes. The U.S. imported $27 billion of toys and sports equipment from China in 2018, government data show.
Apple
On Twitter, Trump said tariffs on the $325 billion of additional Chinese imports will come into force “shortly.” That would mean higher prices for a range of Apple devices from smartphones to watches and headphones.
“All tariffs ultimately show up as a tax on U.S. consumers,” Cupertino, California-based Apple told the Office of U.S. Trade Representative in a letter in September.
The U.S. imported $71.8 billion of mobile phones and other household goods from China last year. In December, Bloomberg reported that Apple’s suppliers can keep production in China if tariffs were at a 10% level, but could consider shifting them out of the country if levies reach 25%– the level Trump is now threatening.
Walmart
Trump’s tariffs would hit household staples in almost every aisle of the local Walmart and other discounters. Think leather goods and handbags, soaps and shampoos, and plates and cups.
Kitting out a new home? Prepare to pay more for China-made fridges and freezers, and knives and forks. In a September letter to U.S. Trade Representative Robert Lighthizer, Walmart said a 25% tariff would be a “serious burden” on lower-income families. “Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forgo purchases altogether,” the retailer said.
Lowe’s
There’d be no escape for Chinese-made hedge shears, chainsaw blades, and lawnmower parts at the home improvements chain. The cost of hammers, screwdrivers and woodworking equipment from China would likely climb, too, at home-improvement stores.
Lowe’s said in February, as it announced fourth-quarter earnings, that tariffs were already eating into the company’s profit margins.
Target Corp.
The price of Chinese-made lipsticks and makeup, suitcases and vacuum cleaners would all likely rise if Trump gets his way.
In a Sept. 6 letter to Lighthizer, retailer Target said it was concerned proposed duties would further hurt consumers and urged Trump’s administration to reconsider.
That’s a sentiment echoed by the National Retail Federation after Trump’s latest pledge. “If the administration follows through on this threat, American consumers will face higher prices and U.S. jobs will be lost,’’ French, the group’s senior vice president, said in a statement.
Some discount retailers may be cornered by yet more tariffs. Because of the price sensitivity of its customers, Dollar Tree Inc. can’t easily pass on to them the cost of the trade-war, Chief Executive Officer Gary Philbin said in its submission to Lighthizer.
