JCPenney warns that Trump's tariffs will worsen the retail apocalypse

Scott Olson / Getty Images‘Let’s not burden a mum, juggling a job and a family, with extra taxes,’ wrote JCPenney counsel David M. Spooner.
  • JCPenney predicted that the Trump administration’s tariffs on Chinese goods will hike up prices and negatively impact its middle class customers.
  • In a September 6 letter to US trade representative Robert E. Lighthizer, the retail chain indicated that the tariffs would worsen the retail apocalypse.
  • The retailer’s counsel David M. Spooner requested that the Trump administration remove products like clothing and household goods from the list of tariffs.
  • “Let’s not burden a mum, juggling a job and a family, with extra taxes,” he wrote.

JCPenney is sounding the alarm on the brewing trade war between the US and China.

The US has slapped a new tariff on $US200 billion worth of Chinese goods, Business Insider previously reported.

JCPenney’s counsel David M. Spooner came out against the opening salvo of the trade war in a letter to US trade representative Robert E. Lighthizer. According to Spooner, the tariffs will burden middle-class shoppers and may even amp up the retail apocalypse.

“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,” Spooner wrote in the September 6 letter. “That means consumers will pay higher prices.”

The Trump administration’s tariffs on Chinese products will hold at 10% until January 1, 2019, at which point they will jump to 25%.

Spooner asked the US government to distinguish between “high-technology products” and consumer goods like luggage, clothing, and accessories, which are both featured in the tariffs. He added that JCPenney is unable to “quickly or easily shift to non-Chinese sources” for products affected by the tariffs.

JCPenney is just one member of a chorus of retailers that have come out against the White House’s tariffs, joining Walmart, Target, and Macy’s. But the latest tariffs aren’t the only worries afflicting the 116-year-old retailer. The chain just recently endured the sudden departure of its CEO and saw its shares tumble last month, after its second-quarter earnings fell short of Wall Street’s expectations.

JCPenney’s letter to Lighthizer held that the brand’s core customers – value-conscious, middle-class mums – stand to lose out in the trade war. Spooner wrote that the average JCPenney shopper “… can’t afford tax increases on knit caps for her family in the wintertime, on back-to-school raincoats and backpacks, or on curtains and window shades for the home – or, for that matter, on purses or handbags.”

The letter cited a National Retail Federation study, which estimated that a 25% tariff on “backpacks, handbags, luggage, wallets, and totes” alone would “force consumers to pay an additional $US1.2 billion as a result of higher prices, and lead to a 17.7 per cent decrease in purchases of these price-sensitive items.”

“While new proposed tariffs on imports may be aimed at China, it is JCPenney’s customers who will be forced to pay more at checkout for items they have always been able to purchase at JCPenney at a tremendous value,” Spooner wrote. “The imposition of tariffs on these consumer goods would constitute a regressive tax increase on hardworking American families. Let’s not burden a mum, juggling a job and a family, with extra taxes.”

Are you an employee at JCPenney with a story to share? Email [email protected]

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.