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.


Hong Kong airport transit from June 1 excludes mainland flights: Cathay Pacific

Updated 1 min 28 sec ago

Hong Kong airport transit from June 1 excludes mainland flights: Cathay Pacific

  • Transit through the airport has been barred since March 25
  • Cathay has cut capacity by around 97 percent due to a fall in demand and strict quarantine regulations
SYDNEY: Cathay Pacific Airways said on Saturday that the reopening of transit services for passengers at Hong Kong International Airport from June 1 will not include those traveling to and from mainland China.
Hong Kong Chief Executive Carrie Lam announced earlier this week that some transit passengers would be allowed through the hub from Monday, but did not provide further details. Transit through the airport has been barred since March 25 as part of measures taken to help control the spread of the coronavirus pandemic.
Cathay said travelers could transit Hong Kong if their itinerary was on a single booking and the connection time to the next flight was within eight hours.
“In this first phase, transiting to and from destinations in mainland China is not available,” the airline said on its website.
China’s aviation regulator has been flooded with tens of thousands of social media comments criticizing it and the Chinese government for the small number of flight options to bring home people stranded overseas.
The regulator drastically reduced the number of allowed international flights to prevent the potential of importing COVID-19 infections. Many foreign airlines are barred altogether and mainland carriers can fly just one weekly passenger flight on one route to any country, which has sent fares skyrocketing.
That rule does not apply to airlines from Hong Kong, such as Cathay, which are allowed more flights to and from the mainland, but the airline’s statement on Saturday indicated it cannot immediately take advantage of the boom in demand.
Cathay has cut capacity by around 97 percent due to a fall in demand and strict quarantine regulations associated with the pandemic.
Rival Asian hub Singapore, which is not allowed nearly as many mainland flights, is gradually allowing some transit traffic to resume from June 2.