Trump’s 15% tariffs on $112 billion in Chinese goods take effect

But with prices of many retail goods now likely to rise, the administration’s move threatens the US economy’s main driver. (File/AFP)
Updated 02 September 2019

Trump’s 15% tariffs on $112 billion in Chinese goods take effect

  • With prices of many retail goods now likely to rise, the administration’s move threatens the US economy’s main driver
  • As a result of Trump’s higher tariffs, many US companies say they will be forced to pass on the higher costs to their customers

WASHINGTON: The Trump administration’s latest round of tariffs on Chinese imports took effect early Sunday, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer goods in advance of the holiday shopping season.
The 15 percent taxes apply to about $112 billion of Chinese imports. All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes. The administration had largely avoided hitting consumer items in its earlier rounds of tariff hikes.
But with prices of many retail goods now likely to rise, the administration’s move threatens the US economy’s main driver: Consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.
As a result of Trump’s higher tariffs, many US companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.
After Sunday’s tariff hike, 87 percent of textiles and clothing from China and 52 percent of shoes will be subject to import taxes.
On Dec. 15, the administration is scheduled to impose a second round of 15 percent tariffs — this time on roughly $160 billion of imports. If those duties take effect, virtually all goods imported from China will be covered.
The Trump administration has been locked in a trade war with China for more than a year, spurred by its assertion that China steals US trade secrets and unfairly subsidizes its own companies in its drive to overtake the United States in such high-tech industries as artificial intelligence and electric cars.
To try to force Beijing to reform its trade practices, the Trump administration has imposed import taxes on billions of dollars’ worth of Chinese imports, and China has retaliated with tariffs on US exports.
The president has insisted that China itself pays the tariffs. But in fact, economic research has concluded that the costs of the duties fall on US businesses and consumers. Trump had indirectly acknowledged the tariffs’ impact by delaying some of the duties until Dec. 15, after holiday goods are already on store shelves.
A study by J.P. Morgan found that Trump’s tariffs will cost the average US household $1,000 a year. That study was done before Trump raised the Sept. 1 and Dec. 15 tariffs to 15 percent from 10 percent.
The president has also announced that existing 25 percent tariffs on a separate group of $250 billion of Chinese imports will increase to 30 percent on Oct. 1.
That cost could weaken an already slowing US economy. Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2 percent annual rate, down from a 3.1 percent rate in the first three months of the year.
The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending. Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.
Americans have already turned more pessimistic in light of the trade war. The University of Michigan’s consumer sentiment index, released Friday, fell by the most since December 2012.
“The data indicate that the erosion of consumer confidence due to tariff policies is now well underway,” said Richard Curtin, who oversees the index.
Some retailers may eat the cost of the tariffs. Target confirmed to The Associated Press that it warned suppliers that it won’t accept cost increases arising from the China tariffs. But many smaller retailers won’t have the bargaining power to make such demands and will pass the costs to customers.


Oil prices fall but losses limited by Brexit deal hopes

Updated 2 min 1 sec ago

Oil prices fall but losses limited by Brexit deal hopes

  • US retail sales in September fell for the first time in seven months adding to economy fears

LONDON: Oil prices fell on Thursday as industry data showed a larger than expected increase in US inventories but losses were limited after Britain and the EU announced they had reached a deal on Brexit.

Global benchmark Brent crude was down 37 cents at $59.05 in afternoon London trade while US WTI crude was also down 37 cents, at $52.99.

US crude inventories soared by 10.5 million barrels to 432.5 million barrels in the week to Oct. 11, the American Petroleum Institute’s weekly report showed, ahead of official government stocks data.

Analysts had estimated US crude inventories rose by 2.8 million barrels last week.

“US sanctions imposed on Chinese shipping company COSCO are seriously denting demand for imported crude ... This has a profound impact on US crude oil inventories as reflected in last night’s API report,” said Tamas Varga, an analyst at PVM Oil Associates.

“US refinery maintenance is not helping to reverse the current trend and further builds in US crude oil inventories can be expected in the next few weeks.”

The US imposed sanctions on COSCO Shipping Tanker (Dalian) and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management for allegedly carrying Iranian oil.

Adding to concerns about the global economy — and therefore oil demand — data from the US showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity.

Nevertheless, Brexit developments helped limit oil’s decline. Prime Minister Boris Johnson said Britain and the EU had agreed a “great” new deal and urged lawmakers to approve it when they meet for a special session at the weekend.

Analysts have said any agreement that avoids a no-deal Brexit should boost economic growth and oil demand.

However, the Northern Irish party whose support Johnson needs to help ratify any agreement, has said that it refused to support the pact.

Hopes of a potential US-China trade deal also supported oil. The commerce ministry in Beijing said China hoped to reach a phased agreement with Washington as early as possible.

But the German government has lowered its 2020 forecast for economic growth to 1 percent from 1.5 percent, the economy ministry said. It said Germany, Europe’s largest economy, was not facing a crisis.