- Black Friday deals could become less appealing after 2018 because of incoming tariffs from President Donald Trump’s trade war with China.
- 2018 has not seen widespread price increases of consumer goods because the tariffs are not all in place yet, and their effects do not immediately filter down to consumers.
- By this time next year, however, the full effects are likely to be felt.
- “It’s almost like this year and next year are two different worlds,” one retail head said.
- Major outlets have said publicly that their prices are likely to go up soon.
This year could be the last truly cheap Black Friday as long as President Donald Trump maintains his trade war with China.
But by this time next year, the consequences of measure including 25% tariffs on billions of dollars’ worth of Chinese goods will have made their way to store shelves and hampered retailers’ ability to offer rock-bottom prices.
“Once you get to that 25% mark, that’s when you’re going to see more price increases for the end consumer,” Christopher Shaker, a consumer-products analyst who is a partner at the consulting firm RSM, told CNN Business.
Major outlets like Costco, Walmart, Gap, Coca-Cola, and General Motors have commented publicly on the tariffs, saying they either plan to increase prices to cope or are already doing so.
Chinese-made goods including handbags, wallets, and perfumes have been subject to 10% tariffs since September, but that amount is due to increase to 25% in January.
Even the smaller tariffs haven’t had a big effect on consumers this year, as many of the items were priced before the tariffs came into effect, Rick Helfenbein, the president of the American Apparel and Footwear Association, told CNN Business.
Therefore two upward pressures are expected to hit at once in 2019: Prices will catch up with the 10% tariffs and then be clobbered again by the hike to 25%.
“It’s almost like this year and next year are two different worlds,” Helfenbein said.
“Shoppers may be pardoned this Thanksgiving season, but they will be paying more come spring,” he added.
Retailers are warning that this will be the case.
“No retailer will be able to simply absorb the cost of a 10% per cent tariff, much less a 25% tariff in today’s ultracompetitive retail environment,” J.C. Penney’s counsel David M. Spooner said in a letter to US Trade Representative Robert Lighthizer in September. “That means consumers will pay higher prices.”
Matthew Shay, the president and CEO of the National Retail Federation, said in September that “with these latest tariffs, many hardworking Americans will soon wonder why their shopping bills are higher and their budgets feel stretched.”
Trump is set to meet with Chinese President Xi Jinping at the G20 Summit in Buenos Aires, Argentina, next week, and some hope that a dialling-down of the trade war could follow.
Tensions between the two sides appear to be waning, with the US signalling a more conciliatory stance in the trade war.
But Chinese trade negotiators canceled preliminary meetings with the US this week.
Around the same time, the Trump administration released a report saying Beijing had done little to placate the US.
Commerce Secretary Wilbur Ross defended the 10% tariffs in September, saying consumers would not notice the increase.
The White House has appeared unsympathetic to companies likely to hike prices on Chinese imports. When it seemed as if Apple might be affected (though some products have since been spared from tariffs), Trump tweeted: “Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive.
“Make your products in the United States instead of China. Start building new plants now. Exciting!”
Business Insider has contacted the White House for comment.
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