Consumers May See Higher Prices This Holiday Season As Trade War Intensifies

Tariffs were increased again on Sunday by the U.S. and China on each other’s goods as part of the ongoing trade war. This could affect the prices of clothes, shoes and other goods for consumers before the holiday season.

“We’ll see what happens,” President Trump told reporters as he returned to the White House from the Camp David presidential retreat. “But we can’t allow China to rip us off anymore as a country.”

More than 2/3 of the items America imports from China now face a higher tax figure. This means Trump’s administration is threatening the primary part of America’s economy: consumer spending.


“We have got a great economy,” said Sen. Pat Toomey, R-Pa. “But I do think that the uncertainty caused by volatile tariff situation and this developing trade war could jeopardize that strength and that growth, and that is, I think, that’s a legitimate concern,” he told ABC’s “This Week.”

Some American companies are warning that they may have to increase prices on Chinese imported goods as a result of this increase, while some companies may take a hit and simply absorb the increase as opposed to raising consumer prices.

Chinese authorities have begun charging higher duties on American goods.

Now, 87% of clothing and 52% of shoes imported from China will be affected.

Once Dec. 15 rolls around, all Chinese imports will likely be affected due to Trump’s plan to impose a second round of a 15% tariff increase.

The current trade war is based on American accusations that China is stealing U.S. trade secrets.

“I give the president credit for challenging China on some of its really egregious behavior” on intellectual property and technology transfers, for example, Toomey said. He said he hopes that’s what Trump’s focus is, “not just the fact that Chinese clothing and shoes are popular among consumers. That’s not the problem.”

If China changes its behavior “in a meaningful way in that area … then we will have ended up in a better place. That’s what I’m hoping for. But let’s be honest. In the meantime, we’re doing damage. It’s a double-edged sword,” he said.

Some believe Trump should have had a different approach to this issue

“It’s a good thing taking on China. Unfortunately, he’s done it the wrong way,” said AFL-CIO President Richard Trumka said on “Fox News Sunday. “To take on China there has to be a multilateral approach. One country can’t take on China to try to dry up its overcapacity because they just send it through to you in other ways,” he said.

Trump has insisted that China pay the tariffs themselves, but in reality, they are falling on U.S. consumers and businesses.

According to a J.P. Morgan study, these tariffs will cost the average American household an extra $1,000 per year.

“The data indicate that the erosion of consumer confidence due to tariff policies is now well underway,” said Richard Curtin, who oversees the University of Michigan’s consumer sentiment index, released Friday.

Companies including Target have assured their suppliers that they will not accept cost increases resulting from China tariffs. Many small retailers will not have this luxury.

Philip Levy, chief economist at the San Francisco freight company Flexport who was an adviser in President George W. Bush administration, said it’s hard to say for sure when the latest tariffs may hit U.S. customers in the form of higher prices.

But, he added, “If you had to pick a time to do it, this is the worst possible time” because it’s when the bulk of holiday goods are brought into the country.