President Donald Trump imposed a 25 percent tariff on more than $34 billion worth of Chinese exports to the US on Friday.
President Donald Trump argues new tariffs on Chinese goods are designed to protect US businesses and force China to change its economic policy. But many consumer industry groups say American consumers will likely bear the brunt of the fight.
While less than 1% of the goods that will be subject to Trump’s tariffs are consumer goods, Trump’s list of products subject to new tariffs includes machinery that does everything from cutting metal, to measuring electrical currents, to incubating chickens. US businesses rely on these products to make their own goods, which are eventually sold to US consumers.
More expensive equipment and parts means that US businesses will see costs rise. In turn, those businesses can pass on the increased costs to consumers or shrink costs in other areas — for instance by laying off workers. According to most experts, businesses will likely use some combination of these two options.
So while the tariffs may not result in an immediate price hike at the checkout line, many industry groups warned that Americans will still see changes.
While Friday’s tariffs will likely hit consumers eventually, Trump’s threat to impose tariffs on another $200 billion worth of Chinese exports to the US would likely result in more direct pain for consumers.
While US consumers may eventually see higher prices on shelves, there’s also a second negative trickle-down effect. Many businesses count China as a major export destination, but the retaliatory tariffs placed by the Chinese government on US products will similarly increase prices in China and hurt sales.
For instance, China’s 25% retaliatory duty on whiskey could harm the US producers, according to the Distilled Spirits Council.
„Imposing 25% tariffs on US whiskeys could put the brakes on an American export success story,” Christine LoCascio, senior vice president for international trade at the Council, said in a statement. “American spirits exports to China have grown by almost 1,200%, from $959,000 in 2001 to $12.8 million in 2017.“
Distillers are worried that retaliatory tariffs, not only from China but Europe and Canada as well, could stunt their sales and slow expansion and hiring plans.
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