President Trump’s threat to put tariffs on $300 billion worth of Chinese goods has hurt businesses’ ability to plan, trade groups say, even though the tariffs are at least four weeks away and trade talks are ongoing.
Businesses need to make decisions regarding purchases and sales months in advance and to have stable supply chains. The threat of tariffs disrupts their ability to do that.
“We’re coming up on the holiday season for retailers and we’re well into the manufacturing cycle for that time and we have to deal with all of this uncertainty,” Sage Chandler, vice president of international trade for the Consumer Technology Association, told the Washington Examiner. “They don’t know if they can get things to customers in time or if they have to figure in price increases and then be noncompetitive with others from outside the U.S.”
September and October are the busiest months for the retail industry, noted Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. “Retail is trying to figure out what is next and what steps they can take to mitigate things — if at all. For example, the president’s Sept. 1 date to start the tariffs: Does that meet when goods enter the U.S., or when they leave their port?”
The concerns could be seen in the turmoil of the markets this week. On Friday, the S&P 500 index and Nasdaq saw their biggest weekly percentage declines this year, with the technology sector taking the hardest hit.
“Manufacturing optimism took a substantial hit in our latest survey, driven largely by uncertainties in trade policy,” said National Association of Manufacturers Chief Economist Chad Moutray.
Trump’s announcement followed a month in which business had hoped things were going in the right direction. The Trump administration had initially threatened to enact the tariffs on the $300 billion in goods back in June, but pulled back following a one-on-one meeting between Trump and Chinese President Xi Jinping. Weeks followed in which both sides signaled an intent to get back to negotiating.
But a trip by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Shanghai this week to talk to their Beijing counterparts apparently resulted in no progress. Trump announced the tariffs hikes the next day.
Trump’s intent appears to be to keep the other side off-kilter, “but unfortunately it also having the same impact on the domestic market as well,” Chandler said.
One difference this time around is that the White House could implement the tariffs at any time. There’s a months-long process involved in instituting tariffs that includes announcements and soliciting public comments, among other bureaucratic work. The administration finished all of that earlier in the year when it first began threatening the tariffs.
It also unclear what the tariff rate will be. Trump initially said Thursday that the tariffs will be set at 10% but then later the same day said they could go as high as 25%.
What the administration hasn’t yet done is announce what products might be excluded from the lists of Chinese goods they initially said would get the tariffs. The public hearings earlier in the year were to give importers a chance to make the case that particular items just weren’t available from anywhere other than China and should be excluded from the tariffs.
The administration did make exclusions when it put 25% tariffs on $250 billion worth of Chinese goods earlier in the year in response to pleas by business. Yet many of those items appeared again on the $300 billion list of items. Lighthizer has told Congress that the president’s intention was to put levies on most remaining imports.
“Are those products going to be removed before we have a final list? Are other products going to be removed?” Gold said. “So it is hard for retailers, or, well, any business, to plan not knowing the finals of what is going to be on the list.”
