Will he or won’t he?
President Trump is considering even higher tariffs on goods coming from China — potentially adding 25 percent duties on $200 billion in imports instead of the 10 percent levies previously contemplated.
That would add to the headaches of retailers and fashion brands, which are enjoying stronger spending after a very tough go of it in 2017.
Trump already started imposing tariffs on $50 billion in Chinese import last month, but they cover mostly industrial goods. The next round, on $200 billion in imports, could be imposed as soon as September and would now have more bite.
U.S. Trade Representative Robert Lighthizer said late Wednesday: “The president has directed that I consider increasing the proposed level of the additional duty from 10 percent to 25 percent….The Trump administration continues to urge China to stop its unfair practices, open its market and engage in true market competition. We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses.”
Matthew Shay, president and chief executive officer of the National Retail Federation, noted: “We said before that this round of tariffs amounted to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China. Increasing the size of the tariffs is merely increasing the harm that will be done. And it’s even more than that — it’s two-and-a-half times the amount originally proposed. Tariffs are an unacceptable gamble with the U.S. economy and the stakes continue to rise with no end in sight.”
And Stephen Lamar, executive vice president of the American Apparel & Footwear Association, urged the administration to “focus its efforts on resolving underlying concerns with China and remedying that country’s trade practices, rather than finding new ways to make the trade war more painful for American consumers and American workers.”
Already, brands were preparing to push up prices in stores.
Steve Madden’s ceo Edward Rosenfeld told investors this week that the additional duties on Chinese-made handbags would fall to shoppers.
“We and others will certainly try to pass on a good chunk of this to the consumer in the form of higher retail prices,” Rosenfeld said, adding that a roughly 3.5 percent increase would offset an additional 10 percent duty.
Now it looks like brands will have even steeper duties to offset.
But Trump, who has been crowing about how strong the economy has been under his watch, clearly feels he has room to operate.
The Federal Reserve held interest rates steady on Wednesday, but noted the strong labor market — unemployment stands at just 4 percent — and “that economic activity has been rising at a strong rate.”
Gross domestic product grew 4 percent in the second quarter, the strongest growth the nation’s economy has seen in almost four years. Trump’s $1 trillion in tax cuts are credited by some for spurring that growth and encouraging consumers to spend, but critics warn that boost can’t last and that the tax reform will ultimately increase deficits.
Trump had also stoked a trade war with Europe, imposing stiff duties on steel and aluminum only to reverse course, agreeing to engage in trade talks, and declare victory.
So far, that pattern isn’t repeating with China.
Reacting to reports of the tariff hike, Geng Shuang, a spokesman for China’s Foreign Ministry, said the country’s position is firm, clear, and has not changed while pressure and blackmail would not work, according to the official Xinhua news service.
He said dialogue must be based on mutual respect, equality, rules and credit, and that threats can only be counterproductive.