Tariffs on goods from China imported into the United States will cost American consumers roughly $6 billion a year, according to a study commissioned by the National Retail Federation (NRF).
The report showed that the proposed 25% tariff on furniture from China would cost Americans $4.6 billion per year in added cost "even if retailers switched their sourcing to other foreign countries or U.S. furniture makers." A similar 25% tariff on travel items including luggage and handbags would add $1.2 billion to what American shoppers would pay for those items, "even if the goods no longer came from China," according to the research.
The U.S. is expected to levy tariffs on $200 billion in goods imported from China. Image source: Getty Images.
Alternate sourcing won't keep pricing down
Whether manufacturers opt to make the impacted items in the U.S. or in a country not impacted by tariffs, tariffs will still lead to higher prices according to NRF Vice President for Supply Chain and Customs Policy Jonathan Gold in testimony prepared for a hearing U.S. Trade Representative (USTR).
"The threat that these tariffs could be imposed, and even expanded to include all consumer goods imported from China, has already started a scramble among importers to find alternative sources of supply, including in the United States," Gold said. "While you may think this is a positive development, the administration needs to know that the scramble is already bidding up prices for consumer products from all possible alternative manufacturers."
And, no matter what happens with the tariffs, actions already taken by manufacturers will lead to higher prices, according to Gold. He added that "even if the administration decides not to impose the tariffs, higher prices are already on the horizon for American families."
Gold warned that tariffs will hit small business owners especially hard. A recent NRF survey showed that 46% of smaller retailers expect that proposed or implemented tariffs will hurt their businesses.
"The collateral damage to wide swaths of the U.S. economy will be significant," Gold said. "This will only get worse as the additional tariffs take effect and retaliation escalates."
What happens next?
The NRF has been vocal in its opposition to the proposed tariffs on Chinese goods. It has actively lobbied the USTR and President Donald Trump to rethink these policies.
"By now the administration should know something it questioned several months ago: Tariffs will not get China to change its unfair trade practices," Gold said. "Instead, these tariffs threaten to increase costs for American families and destroy the livelihoods of U.S. workers."
What can you do?
As a consumer there's very little you can do. In theory, you might consider not putting off purchases in areas potentially impacted by the tariffs. For example, if your couch is on its last legs or your luggage has seen better days, you may save some money by replacing them now.
Unfortunately, the range of items that could be impacted by tariffs is very broad. Aside from a little selective advance purchasing or simply not buying items as prices rise, there's nothing a consumer can do. This is a situation where your best hope lies in comparison shopping to see which retailers and manufacturers find the most creative ways around the tariffs or choose to take lower margins to keep prices down.
