Trump trade dispute with Beijing could slam U.S. retailers

Trucks transport shipping containers at a port in Lianyungang, Jiangsu province, China April 6, 2018. REUTERS/Stringer

Vastavam web: The Trump administration’s trade dispute with Beijing could slam U.S. retailers if tariffs are implemented and lead to higher prices or a shortage of merchandise.President Donald Trump late on Thursday said he was considering penalties on $100 billion in Chinese goods, without specifying which goods he would target. That would be in addition to the proposed tariffs on $50 billion of imports from China that Washington unveiled last week. Trump’s first round of $50 billion in tariffs mostly targeted industrial goods and electronic components.

The two biggest categories of U.S. imports from China last year were communications and computer equipment, totaling $137 billion according to U.S. Census data. Cellphones and computers, key portions of these categories, were spared from the initial tariffs list. Apparel and footwear, both labor-intensive industries in China, made up a combined $39 billion in U.S. imports.

“It’s this rhetoric around another $100 billion in tariffs that concerns us because certainly within that next pool of categories it would be hard to exclude apparel and footwear,” said Robert D’Loren, chief executive of Xcel Brands Inc, a clothing supplier to Macy’s Inc, Hudson’s Bay Co and others.Jonathan Gold, the National Retail Federation’s vice president for supply chain and customs policy, also expressed concern over what the new set of tariffs might entail.

“Our concern is that the new set of tariffs will turn to more consumer products not on the list and will now include things like apparel, home goods, shoes, all of those basic retail goods coming in from China,” Gold said.Should a trade war ensue, retailers with vast global supply chains may suffer less than others. Costco Wholesale Corp, Walmart Inc, Home Depot Inc and Lowe’s Companies Inc, for example, have the ability to acquire products in multiple markets and could move to tap alternative markets such as Vietnam, Bangladesh or Colombia for merchandise.

“Many retailers will do just fine, but you have to have other markets where your products can go,” said Brandon Fletcher, an analyst at broker-dealer Sanford C. Bernstein.“Let’s say you pre-committed six months ago to buying a whole bunch of TVs from China. Now, the tariffs might force that to be a 25 percent higher price. And so you say, ‘OK, I don’t want to sell these in the U.S. because I have to pay the tariff.’ Well, is there a tariff for China on selling televisions to Mexico? Nope.”

At Dollar General Corp, a substantial amount of imported merchandise comes from China, according to a company filing dated March 23. A spokesman for Dollar General declined comment.At Target Corp, China is its single largest source of merchandise. It said in its annual report, the imposition of additional tariffs or duties on imported products could adversely affect its business. “Like all companies, we are monitoring the situation very closely,” a Target spokeswoman said.