President Trump has issued tariffs across several industries in an effort to encourage companies to move their production from overseas to the United States. This week, the retail industry took a hit with tariffs that target the customer base of several major American retailers.
In early September, major retailers including Walmart, JoAnn Fabrics, Ace Hardware, and Target, lobbied the Trump administration. They asked the administration to reconsider putting tariffs on consumer goods including holiday lights, dog food, luggage, shampoo, mattresses, handbags, backpacks, vacuum cleaners, bikes, grills, cable cords, and air conditioners. The retailers expressed concern that the proposed 10 percent tariffs would lead to an increase in prices for consumers and a decrease in profits for the companies.
The administration announced this week that they are moving forward with the plan to add 10 percent tariffs to the above-mentioned consumer goods. The tariffs will increase to 25 percent before September is over. Some items that will not be subject to tariffs, for now, include bike helmets, high chairs, car seats, and playpens.
What do the tariffs mean for consumers?
Consumers will see an almost immediate rise in prices for everyday items since retailers are going to be paying more to stock their shelves. Walmart is particularly concerned since their customer base consists of low- to middle-income individuals and families who will now be paying more for their everyday purchases.
Whether the tariffs will push American companies to shift production from overseas to the United States remains to be seen since supply chains are complicated and can’t be switched overnight, or even over the course of a few months.
For example, over 85 percent of holiday lights, which are currently under a 10 percent tariff, were imported from China last year. Consumers might be safe from seeing a price hike on lights this year since retailers have already bought supplies for 2018 – but they should expect to see an increase in price for the 2019 holiday season.