Beth Aberg measures the cost of President Trump’s tariffs on $200 billion of Chinese imports in dining-room table prices and dismayed furniture shoppers.
The owner of Random Harvest Home Furnishings, which operates three stores in the D.C., area, said she has already been forced to pass on most of the cost increase from the 10% duties the White House imposed last year.
If the president follows through on his Sunday threat to double them to 25%, “It will stop us carrying almost everything that we carry from China,” she told the Washington Examiner. “Because furniture items are already higher ticket, an increase from 10% to 25% is really significant,” she added. “I don’t think the administration understands how much damage it’s doing, both to the U.S. economy and the consumer.”
Her concerns are shared by not only small business owners across the U.S. but economists and lawmakers who worry that Trump’s policies are undermining the benefits of GOP-led tax cuts in 2017 and looser regulations intended to buoy corporate investment. Major U.S. stock indexes tumbled after the president’s ultimatum, with the blue-chip Dow Jones Industrial Average giving up 539 points in just two days, or about 2% of its value.
Irritated by delays in reaching a trade deal with Beijing that negotiators had been working on since last fall, Trump said he would not only raise existing duties but add 25% levies to another $325 billion in Chinese imports, covering everything the U.S. buys from the country.
[Related: China shows eagerness to deal despite Trump tariff threat, analysts say]
While the White House had long threatened such an action in order to eliminate a trade imbalance between the two nations, the administration paused levy increases for three months after Trump and Xi decided during a Buenos Aires meeting in late November to work toward a long-term agreement.
The moratorium expired in early March, but Trump stretched the timetable for talks and was upbeat about progress as recently as last week. That soured when Beijing began trying to walk back its commitments to pivotal terms, according to U.S Trade Representative Robert Lighthizer, the administration’s chief negotiator.
Lighthizer’s declaration that the duties would increase as of 12:01 a.m. Friday, May 10, depressed markets that had begun to rebound from steep Monday losses amid speculation that Trump’s tweets were merely a negotiating tactic.
While American business executives have for years sought greater access to China, the world’s second-largest economy, and relief from Beijing’s appropriation of intellectual property, they’re disturbed by the effect of the administration’s tactics on their bottom lines.
Trump’s blunt statement Sunday that China was footing the bill for the tariffs and that the duties have had little impact on cost contradicts the experiences of business executives who have described just the opposite for more than a year.
Exacerbating the problem is that tight profit margins make shielding customers from the impact a challenge for retailers of all sizes, and small businesses in particular.
A 25% tariff on $325 billion in Chinese imports would amount to an $81 billion tax increase, noted David French, chief lobbyist for the National Retail Federation, which represents an industry employing 42 million people and contributing $2.6 trillion to the U.S. economy.
The group’s members expressed alarm on Monday at the prospect “of an escalating trade war, because of the likely consumer harm,” French told the Washington Examiner. “Living day to day on the precipice of a trade war is not pleasant for anybody who’s got to plan for the next holiday season or the next major sales landmark. It’s just hard to do business in that environment.”
Aberg, who has 35 years in the furniture business, agrees. She understands the administration’s goals as well as its argument that the tariffs are hurting the Chinese economy enough to bring Xi to the negotiating table, but she believes the impact on the U.S. is worse.
“They’re cutting off our nose to spite our face,” she said. “They have to stop.”
At Parsippany, N.J.-based Kent International, a bicycle business that lost money last year because of the China tariffs, Trump’s plan to boost the existing levies would “be incredibly inflationary,” CEO Arnold Kamler told the Washington Examiner.
His company builds about 350,000 bikes a year at a plant in Manning, S.C., and imports another 2.5 million from China that are sold to large retail chains.
“People don’t realize that not everybody is rich,” he said. “When suddenly our prices, which went up 7% to 10% last fall, go up another 10% to 15%, this slows business down and people will cancel or postpone the purchase of new bicycles.”
While Kamler wants the administration to keep negotiating with China, which he says has been cheating for years, he’d prefer an end to the public spectacle and threats. He’s also disturbed by the erroneous claim that Chinese companies are picking up the tab for the duties, which are paid by American buyers to the U.S. Customs Service as soon as shipments arrive, then inevitably passed on to consumers.
“How anybody could interpret that as China’s paying for this, I have no idea,” he said. “Continue to press on these issues, but slow it down. The damage you cause by rushing this thing hurts the Chinese economy, but it also hurts the U.S. economy.”
